The pandemic will have a lasting impact on U.S. retailing, including a heightened propensity toward online shopping, an ongoing demand for curbside pickup or accelerated at-home delivery, and the desire to cut down on the number of stores visited.
That’s the opinion of Brian Cornell, chairman and chief executive officer of Target Corp., who was a guest of Matthew Shay, president of National Retail Federation as part of the organization’s Retail Leadership Series on Thursday morning.
“As I think about the next 18 months and beyond that, there are three or four elements coming out of the pandemic that will be sticky,” he said. “I certainly think during the pandemic, millions and millions of Americans have learned to shop online. We reported during our first-quarter earnings we had 5 million new users at target.com and 2 million new guests who discovered our drive-up lane. I expect them to continue to use those services and I think we’re going to see a consumer who continues to enjoy stores but also has these convenient options, same-day options, when people don’t want to wait. They like that at noon they can place an order and at two o’clock can drive by and we’ll put it in their trunk or have one of our ‘ship shoppers’ go shopping for you and within two hours put it on your front door.”
In addition, Cornell said he believes there will also be an even greater focus on safety in the future, and retailers need to offer more contact-free options for their customers. And with the “challenges we’re seeing in the economy, there’s going to be a continued focus on value,” he continued. “And more and more, we’re seeing an American consumer looking to consolidate the number of places they shop.” For Target, which offers everything from apparel and home goods to food and beverages, this will be a continued advantage going forward, Cornell believes.
Turning to the fourth quarter and holiday season, Cornell joked that while he used to look at long-range planning in three-, four- or five-year increments, it’s now more like four weeks. As a result of the pandemic, civic unrest and economic uncertainty, he said retailers need to be ready to turn on a dime.
“We’ve got to be flexible, we’ve got to place some bets where we’re confident and be willing to adjust along the way,” he said. “We’re going to have a Christmas holiday season and I suspect the consumer to actually celebrate Father’s Day this weekend, the Fourth of July and Labor Day. We’re getting reports that back-to-school is going to happen and colleges are finding a way to conduct classes in the fall, but I expect it to be different. We have to be more flexible and adapt along the way. The horizon and the window where we can see is much shorter than it used to be and we’re going to have to constantly adjust and recognize that we’ll place a few bets that won’t work out but we’re going to have to continue to listen to the consumer, see what’s happening in the economy, understand the different trends and perhaps into early 2021, we’re going to have to operate very differently.”
He said businesses have to recognize that “perfection is not the goal, perfection is actually the enemy. We have to make sure we adjust and iterate along the way.”
In the past few months, Target has benefited by being deemed an essential business whose stores were allowed to remain open. But it has also been hurt by the rioting surrounding the killing of George Floyd that was centered in its home town on Minneapolis. Cornell said that while the company has always tried to be inclusive, the reaction to Floyd’s death prompted Target to further accelerate its initiatives to understand the psyche of its Black associates and start to “drive change.”
The company donated $10 million to organizations that work against racism and pledged 10,000 hours of consulting to minority-owned small businesses. It also vowed to rebuild and reopen its Minneapolis-area stores that were damaged during the looting that was on the fringes of the otherwise generally peaceful protests.
Cornell said that despite the recent upheaval, he remains “very confident” about the future of retail in America. He said Americans are resilient and will adapt, as will retailers. “While we’re going to continue to see change, stores are going to continue to play an important role. The vitality of retail is important to the future of the American economy.”