Why Target’s Results Look Good, and What’s Likely Next

Target Corp. today reported its strongest fourth quarter results since 2005. Some of this is due to an overall strong holiday season for larger U.S. retailers, and its ability (as with WalMart) to pick up toy sale-market share after Toys R Us went out of business last year.

But much of Target’s success of late has to do with CEO Brian Cornell’s $7 billion bet to essentially reinvent what had become a stodgy retail operation complete with out-of-date logistics (the primary reason it failed in Canada) and inadequate technology infrastructure.

Target is now a leading example of being able to shop anyway, anytime and anywhere one wants to do so. Even Amazon can’t claim this (it doesn’t have Target’s brick and mortar capabilities of letting one check out a product before purchasing). It reconfigured distribution, making more than 400 of its stores also serve as mini-distribution centers for home delivery and store pick up purposes. And unlike Walmart and other peers, Target decided to create 12 new brands from scratch, while modifying the speed with which it can create new brands, and tweak them to fit the look and feel of different regions.

This short radio interview with WCCO-AM’s Cory Hepola provides more insight. And for even more perspective, check out this post from a few days ago.