'Target CEO claims customers are saying ‘a big thank you’ for locking up merchandise'

[mbz321]

https://www.cnbc.com/2023/11/15/target- ... items.html

As Target tries to fight theft at its stores, it has left customers frustrated to find many everyday items locked up.

Still, the retailer’s CEO, Brian Cornell, claimed many shoppers are actually grateful to see their body wash, toothpaste and deodorant behind a glass panel.

On a media call with reporters discussing Target’s fiscal third-quarter earnings, CNBC asked Cornell if the retailer can quantify the sales lost from shoppers who are frustrated with waiting for employees to unlock cases in-store. He said the shopper response to the policy has been “positive.”

“Courtney, just in the last week I’ve been on the East Coast and on the West Coast in many of those stores that you’ve talked about where, items have been locked up,” he said. “And actually what we hear from the guests is a big thank you, because we are in stock with the brands that they need when they’re shopping in our stores. And because we’ve invested in team member labor in those aisles and make sure we’re there to greet that guest, open up those cases and provide them the items they’re looking for.”

Yeah, is anyone buying this line? All I read about when it comes to locked cases is countless complaints of having to wait around forever for one of the few employees to unlock them.

[TW-Upstate NY]

And knowing how notoriously understaffed Target stores are, it must be a VERY long wait. Comments like the CEO's just show the disconnect between what is happening in the executive suite vs. the sales floor.

[storewanderer]

The CEO seems to think there is an employee waiting there in the aisle to open the locked cases. If that is the case, if there is ALWAYS an employee in every aisle waiting there to promptly open the locked case then I am on board with this program too. But I've never seen that. It is always use a call box and wait for someone. Stores add labor initially then as time goes off the service and staffing levels decline.

And they do have data on how long the call box responses take, stores are scored on that.

Thinking more if they would station an employee to be physically present in the aisle 100% of the time they wouldn't need the locked cases in the first place.

[ClownLoach]

The CEO seems to think there is an employee waiting there in the aisle to open the locked cases. If that is the case, if there is ALWAYS an employee in every aisle waiting there to promptly open the locked case then I am on board with this program too. But I've never seen that. It is always use a call box and wait for someone. Stores add labor initially then as time goes off the service and staffing levels decline.

And they do have data on how long the call box responses take, stores are scored on that.

Thinking more if they would station an employee to be physically present in the aisle 100% of the time they wouldn't need the locked cases in the first place.

The highest shrink stores are tasking the Assets Protection team members to unlock the glass cases to add to staffing. Target used to very closely track call box response times and punish stores that take too long. The team members have one minute to clear the call box before it goes on the report as an overdue. That is when a Manager is supposed to start yelling and/or going to unlock the case themselves. If it gets to two minutes then it goes on a special report to the DM and Group VP who expect that report to be a blank page.

So there's no question that the CEO knows exactly how long it is taking because Target has proprietary technology to track it. Walmart is copying it and testing it at Sam's Club currently with a interesting twist, QR codes to scan for service which apparently is tracked.

Interestingly enough they did announce in their Financials that they're going to add payroll for these programs.

[ClownLoach]

And knowing how notoriously understaffed Target stores are, it must be a VERY long wait. Comments like the CEO's just show the disconnect between what is happening in the executive suite vs. the sales floor.

Two minutes or less, and they have used proprietary digital tracking call boxes for a decade and a half now. People are written up for customers waiting longer than two minutes.

[babs]

It's the checkout where they are upsetting customers. One or two staffed registers and four or fewer working self checkout stands with dozens of customers waiting is a poor reflection on Target. Probably why sales are down but margins are up.

[ClownLoach]

It's the checkout where they are upsetting customers. One or two staffed registers and four or fewer working self checkout stands with dozens of customers waiting is a poor reflection on Target. Probably why sales are down but margins are up.

I'm not seeing this at all anymore, in fact the absolute reverse with the push away from self checkout which is express only 10 items or less now. The Greatland or Super formats with two entrances have closed the lesser used bank of self checkouts and moved the cashier back to the register too. I have not waited in any line deeper than 1 person since the self check 10 item limit went into effect and they added front end staffing for shrink prevention. It appears they've established a minimum of at least 6 open staffed registers at all times. Two plus years ago? Yes. Not anymore, even at the store I find to be less operationally sound.

I think the problem as we've seen here is market level inconsistency, such as the broken Sacramento-Reno market, the rough Portland and Seattle-Tacoma markets, and the mediocre DFW market. I think Target needs to, well, target the leadership at a regional and division level because clearly that is where the gaps are. You can see where an entire district runs very well, or very poorly, but in my opinion that is on the group (aka regional) for not managing the district manager well or holding them accountable which in turn would roll downhill into the stores and result in improved store condition and service.

Gross margin is calculated separately of operating margin (which is where the payroll costs are). One thing I have noticed is that where Target was holding the line on commodity grocery items they stopped, and pushed price increases. For example they had house brand 8oz shredded cheeses holding at $1.99 when everyone else was raising prices, cutting an ounce or two, or both. They finally gave in and bumped them up to $2.39. Same for bagged chopped salads they were holding at $2.99, but finally moved up to $3.99. So they decided to not run loss leaders and instead pass along inflation to the customer finally since apparel sales are down and they can't use those non-grocery sales to make up for absorbing price increases. The inflation was pumped into the prices, customers who were going out of their way to save over say Kroger or Albertsons or even Walmart lost their reason to buy these commodity foods at Target and went back to other stores. Hence sales down, margins up. Operating margin is something they're never going to admit, customers are moving away from drive up (which is labor intensive) and going back to in store shopping. That automatically improves operating margins and quarterly earnings since remember the formula, labor for one pickup transaction exceeds cashier labor for 25+ regular register transactions. Plus the improved cashier service that fixed the long lines would make me more likely to shop in store vs pickup.

Drive up has turned into "they're so busy that nobody goes there anymore" - I suspect too many people found it to be a hassle where they were waiting longer than they expected and gave up. Remember Target moved to app geolocating, when you click "on my way" or the app detects you moving towards the store then they go find your staged order and bring it up front. If you didn't check in, or you're paranoid and don't give permission for Target to see you're either en route or there, then it was entirely possible and likely to wait 20+ minutes for a drive up order as those who checked in earlier were always given priority.

[babs]

It's the checkout where they are upsetting customers. One or two staffed registers and four or fewer working self checkout stands with dozens of customers waiting is a poor reflection on Target. Probably why sales are down but margins are up.

I'm not seeing this at all anymore, in fact the absolute reverse with the push away from self checkout which is express only 10 items or less now. The Greatland or Super formats with two entrances have closed the lesser used bank of self checkouts and moved the cashier back to the register too. I have not waited in any line deeper than 1 person since the self check 10 item limit went into effect and they added front end staffing for shrink prevention. It appears they've established a minimum of at least 6 open staffed registers at all times. Two plus years ago? Yes. Not anymore, even at the store I find to be less operationally sound.

I think the problem as we've seen here is market level inconsistency, such as the broken Sacramento-Reno market, the rough Portland and Seattle-Tacoma markets, and the mediocre DFW market. I think Target needs to, well, target the leadership at a regional and division level because clearly that is where the gaps are. You can see where an entire district runs very well, or very poorly, but in my opinion that is on the group (aka regional) for not managing the district manager well or holding them accountable which in turn would roll downhill into the stores and result in improved store condition and service.

Gross margin is calculated separately of operating margin (which is where the payroll costs are). One thing I have noticed is that where Target was holding the line on commodity grocery items they stopped, and pushed price increases. For example they had house brand 8oz shredded cheeses holding at $1.99 when everyone else was raising prices, cutting an ounce or two, or both. They finally gave in and bumped them up to $2.39. Same for bagged chopped salads they were holding at $2.99, but finally moved up to $3.99. So they decided to not run loss leaders and instead pass along inflation to the customer finally since apparel sales are down and they can't use those non-grocery sales to make up for absorbing price increases. The inflation was pumped into the prices, customers who were going out of their way to save over say Kroger or Albertsons or even Walmart lost their reason to buy these commodity foods at Target and went back to other stores. Hence sales down, margins up. Operating margin is something they're never going to admit, customers are moving away from drive up (which is labor intensive) and going back to in store shopping. That automatically improves operating margins and quarterly earnings since remember the formula, labor for one pickup transaction exceeds cashier labor for 25+ regular register transactions. Plus the improved cashier service that fixed the long lines would make me more likely to shop in store vs pickup.

Drive up has turned into "they're so busy that nobody goes there anymore" - I suspect too many people found it to be a hassle where they were waiting longer than they expected and gave up. Remember Target moved to app geolocating, when you click "on my way" or the app detects you moving towards the store then they go find your staged order and bring it up front. If you didn't check in, or you're paranoid and don't give permission for Target to see you're either en route or there, then it was entirely possible and likely to wait 20+ minutes for a drive up order as those who checked in earlier were always given priority.

Things must be different in the Pacific NW. Haven't seen any 10 item limit signs. We dont have super Targets here. Most stores only have 4 self checkout stands, a few recent remodels have 6 but that's rare. Only 1 or 2 staffed registers. The NW used to be a premier region for them but that's not the case anymore.

[storewanderer]

No item limits on self checkout in Arizona or Nevada and only a few staffed registers open if you are lucky, and one open at slower times. ALL self checkouts open in Arizona, none broken.

They're supposedly adding labor in Reno but can't fill the positions or get employees to show up to work.

[Romr123]

I think they're definitely more "on their game" here in SE Michigan than in other places; with them being whipsawed between Meijer and Kro-Mart....stores are immaculate--floors shiny--was at one store yesterday (Madison Heights) where literally EVERY employee had a huge smile on their face (almost wondered if they'd just been told the store was staying open or something...literally that genuinely friendly and helpful). The less-good store (Southfield) is still less-good (odd because it's the most upscale clientele of the 3)...longest waits for orders to be brought out, long waits for liquor to be rung at SCO, etc etc. Only go there for an order when I can't go to the other stores. Stuff isn't oppressively locked up, either.

They were "sticky" on the upside (holding off on increasing pricing) but have IMHO overshot a bit (as mentioned, shredded cheese from 1.99 to 2.29, Silk soy milk from 2.99 (way under market) to 4.29 then down to 3.99 (still better priced than Meijer or Kroger). I only buy produce now with a Circle discount (it's neither good enough nor cheap enough to bother).