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What’s behind Target’s Strong Digital Sales in Q2?

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Digital sales jumped 41% in Q2

The key catalyst to Target’s (TGT) stellar performance in the first half of 2018 is the company’s booming digital business. During the reported quarter, Target’s comparable digital sales accelerated and jumped by 41%. Target’s e-commerce channel sales are encouraging, as this growth comes on top of the 32% increase it recorded during the prior year period.

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What’s driving Target’s digital sales?

Target continues to expand its digital business and is matching the services offered by Walmart (WMT) and Amazon (AMZN). Target expanded its fulfillment options significantly, which are driving sales for its e-commerce channel. For instance, Target expanded its same-day delivery through Shipt in 1,100 stores across 160 markets. Management stated that the membership base for Shipt has more than tripled over the last year, while orders and revenue are two to three times higher.

Target rolled out a new service called “delivery from store” in 58 stores across five markets for a small fee. The company’s drive-up service (or curbside pickup), which is similar to Walmart’s popular online grocery pickup service, is now available in more than 800 locations. Target plans to expand the same to 1,000 stores by the holiday season.

Also, its Restock program is showing strong adoption, as the company reduced the fee for service and expanded it to newer markets.

Above all, Target’s second-quarter digital sales were positively impacted by its one-day sale in July, wherein the company recorded robust digital sales with volumes nearly tripling expectations.

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