CVS Closing Dozens of Pharmacies Inside Target

[storewanderer]

I never said Target was dying. Right now they're in their stable state, but that's where the cracks are forming. Retail analysts noted problems with Sears years ago, with the retailer trying to push more into softlines, yet their continued success proved elusive and within a decade (despite still turning a profit) they were bought by a hedge fund...and well, you know the rest.

The difference between Target and Sears is that Target doesn't have the competition that Sears had. And in some areas, Target has no direct competition. In the five boroughs of NYC, Los Angeles, San Francisco and San Mateo County, California, there is no Walmart. Target is really the only store in those places where people can get a wide selection of items at a good price, all in one place without needing a membership. And even the places that need a membership don't have certain products like office supplies, small electronics, baby products, and many other products where a bulk-size offering isn't feasible. In some parts of NYC you have to drive up to a half hour or more, and pay an ever-increasing $17.63 toll (with congestion pricing if you live in Manhattan) just to get to the nearest Walmart. Target is just so much easier and convenient to NYC residents and has a strong foothold in the city due to the lack of competition. In fact there are more Targets in the five boroughs than in 70% of the 50 states (and they are continuing to open more) and it's gotten to the point where, in some parts of NYC, Target is the only physical store that sells certain categories of products. If you ask me, I think Target isn't even close to "cracks forming" and won't be so for a very long time (if ever). They make over $100 billion a year (Walmart, Costco, and Home Depot are the only large US retailers that make more than that) and have a market cap of $65 billion (about the same as FedEx). They're more profitable than Walmart and Amazon in some regards and have much more urban marketing. I just can't imagine NYC without Target (especially the outer boroughs).

The bigger issue is the customer in NYC is not the same as the suburban customer in much of the US. Target seems to miss the mark on that. So they may do great in NYC where as you point out they have no competition, and do great in some suburbs where competition is present but still limited, but the more rural or medium market the area gets, the worse Target performs, relative to Wal Mart. Sure they are profitable and surviving, but they are not where they need to be in a number of these medium/rural markets.

I also don't think if Wal Mart were to somehow get stores near a few Targets in NYC, that they'd be overly successful with them, due to their competency catering fairly well to suburb customers and very strongly to medium market/rural customers.

There are definite cracks forming at Target and have been for quite some time. They were propped up on Cloud 9 in 2020 when the malls/general merchandise competitors all got closed due to being "non essential businesses" and thought they were unstoppable. Pretty easy to be unstoppable when so many competitor stores are closed. Closures of chains such as Toys R Us and Bed Bath and Beyond have also helped Target significantly but those are one time events.

[ClownLoach]

I never said Target was dying. Right now they're in their stable state, but that's where the cracks are forming. Retail analysts noted problems with Sears years ago, with the retailer trying to push more into softlines, yet their continued success proved elusive and within a decade (despite still turning a profit) they were bought by a hedge fund...and well, you know the rest.

The difference between Target and Sears is that Target doesn't have the competition that Sears had. And in some areas, Target has no direct competition. In the five boroughs of NYC, Los Angeles, San Francisco and San Mateo County, California, there is no Walmart. Target is really the only store in those places where people can get a wide selection of items at a good price, all in one place without needing a membership. And even the places that need a membership don't have certain products like office supplies, small electronics, baby products, and many other products where a bulk-size offering isn't feasible. In some parts of NYC you have to drive up to a half hour or more, and pay an ever-increasing $17.63 toll (with congestion pricing if you live in Manhattan) just to get to the nearest Walmart. Target is just so much easier and convenient to NYC residents and has a strong foothold in the city due to the lack of competition. In fact there are more Targets in the five boroughs than in 70% of the 50 states (and they are continuing to open more) and it's gotten to the point where, in some parts of NYC, Target is the only physical store that sells certain categories of products. If you ask me, I think Target isn't even close to "cracks forming" and won't be so for a very long time (if ever). They make over $100 billion a year (Walmart, Costco, and Home Depot are the only large US retailers that make more than that) and have a market cap of $65 billion (about the same as FedEx). They're more profitable than Walmart and Amazon in some regards and have much more urban marketing. I just can't imagine NYC without Target (especially the outer boroughs).

I think you are confused about revenue versus earnings. Revenue is what you sell in a time period, while earnings are what profit is left after all expenses are paid.

They do not "make" $100B a year. They have revenue, or money brought in, of about $100B. Still worth recognizing that their revenue which hovered in the $60B range forever has grown substantially to $100B, although inflation is responsible for some of that.

They "made" $2.2B as their profit at the end of last fiscal year, which was a big drop from $8.9B the previous year when COVID drove their profits since they were open when many others were closed.

[storewanderer]

I think you are confused about revenue versus earnings. Revenue is what you sell in a time period, while earnings are what profit is left after all expenses are paid.

They do not "make" $100B a year. They have revenue, or money brought in, of about $100B. Still worth recognizing that their revenue which hovered in the $60B range forever has grown substantially to $100B, although inflation is responsible for some of that.

They "made" $2.2B as their profit at the end of last fiscal year, which was a big drop from $8.9B the previous year when COVID drove their profits since they were open when many others were closed.

There is no denying they are very profitable but the COVID thing in my opinion made the company think it was unstoppable.

We will see how it plays out the next few years.

If what you expect to happen with increased expansion of 150k square foot boxes and an actual long term commitment to the Super Target format including perishables and including in-store service departments then I think they can gain some real ground against various grocers, Costco, and to some extent Wal Mart in suburbs and medium markets. But there are a lot of ifs. And their small hardlines mix needs to be addressed.

I do wonder how much they can gain from Wal Mart though. I kind of feel like Wal Mart's customers are extremely loyal (I don't get it either).

[veteran+]

The why is that the majority of "trained and brainwashed" consumers have accepted mediocrity (at best) as the new norm.

[storewanderer]

The why is that the majority of "trained and brainwashed" consumers have accepted mediocrity (at best) as the new norm.

"At best" - you've got that right.

The lack of store standards I see at the current Target... never would have flown even back in the early 2010's.

Target used to pattern its service program after Disney. I think they need to call Disney up again because they have drifted far. Calling customers guests and having round name tags like Disney are about the only things left from that.

[HCal]

They "made" $2.2B as their profit at the end of last fiscal year, which was a big drop from $8.9B the previous year when COVID drove their profits since they were open when many others were closed.

COVID lockdowns didn't affect retail after mid-2020. In California, the initial lockdown in March of that year included non-essential retail, but subsequent lockdowns going into 2021 exempted all retail. Other states were even less strict.

[storewanderer]

They "made" $2.2B as their profit at the end of last fiscal year, which was a big drop from $8.9B the previous year when COVID drove their profits since they were open when many others were closed.

COVID lockdowns didn't affect retail after mid-2020. In California, the initial lockdown in March of that year included non-essential retail, but subsequent lockdowns going into 2021 exempted all retail. Other states were even less strict.

I don't think you remember how things worked. There was major political pressure on these chains to CLOSE during COVID whether the state told them to be closed or not. Any chain that tried to stay open was getting roasted by the media and parrot talking head politicians, it was going to kill its customers, kill its employees, etc.

Malls were closed everywhere. So the major retail chains for clothing/home goods/etc. all caved in and closed. Stores that did not have to close, still closed. For instance World Market closed- didn't have to (since they have food- essential good) but they did. Macy's was 100% closed (except if you ordered on Macys.com). Kohl's was closed. Dillards eventually closed and let Wal Mart borrow its employees.

Hobby Lobby attempted to stay open arguing they had essential fabric to make masks (nice try) but they were closed down by local authorities in some markets and eventually closed all stores chainwide. Michaels and Jo Ann voluntarily closed ALL stores.

Home Depot/Lowes stayed open. As I recall all of the auto parts stores and office supply stores, stayed open... Big 5 was open very limited hours where they were allowed (closed about half of their stores as I recall)... of course Dick's closed as they have to follow the orders of the media/parrots... so where I am going here is the stores competing with Target in categories where Target is weakest, stayed open. But the stores competing with Target in the categories where Target gets most of its profits from (clothing, soft goods, home goods) were closed and sent all of that business to Target. It was an absolute massive windfall for Target.

In some states (MI as I recall) stores like Target or Meijer had to actually rope off toys/clothing as "non essential categories" as they were not allowed to sell those items during the lockdown. CA was not the most strict state when it came to COVID rules in my opinion.

Malls across the US were closed. Indoor shopping was closed longer than other retail. Entire malls were still closed in CA in the fall of 2020 (anchor stores with exterior entrances were open by then). I explicitly remember going to Sears in Sacramento at some point then (maybe it was August or September but pretty sure it was in the fall) and Arden Fair Mall was still closed due to the indoor malls still being prohibited. I think in Reno the mall had opened back up by that point, but not all stores inside the mall were open yet or ran very limited hours.

But Target- jam packed... and online orders blowing up... during that entire 2020 period the moment lockdowns started and that momentum continued well into 2021 even after everything else opened back up.

[HCal]

They "made" $2.2B as their profit at the end of last fiscal year, which was a big drop from $8.9B the previous year when COVID drove their profits since they were open when many others were closed.

COVID lockdowns didn't affect retail after mid-2020. In California, the initial lockdown in March of that year included non-essential retail, but subsequent lockdowns going into 2021 exempted all retail. Other states were even less strict.

I don't think you remember how things worked. There was major political pressure on these chains to CLOSE during COVID whether the state told them to be closed or not. Any chain that tried to stay open was getting roasted by the media and parrot talking head politicians, it was going to kill its customers, kill its employees, etc.

Malls were closed everywhere. So the major retail chains for clothing/home goods/etc. all caved in and closed. Stores that did not have to close, still closed. For instance World Market closed- didn't have to (since they have food- essential good) but they did. Macy's was 100% closed (except if you ordered on Macys.com). Kohl's was closed. Dillards eventually closed and let Wal Mart borrow its employees.

Hobby Lobby attempted to stay open arguing they had essential fabric to make masks (nice try) but they were closed down by local authorities in some markets and eventually closed all stores chainwide. Michaels and Jo Ann voluntarily closed ALL stores.

Home Depot/Lowes stayed open. As I recall all of the auto parts stores and office supply stores, stayed open... Big 5 was open very limited hours where they were allowed (closed about half of their stores as I recall)... of course Dick's closed as they have to follow the orders of the media/parrots... so where I am going here is the stores competing with Target in categories where Target is weakest, stayed open. But the stores competing with Target in the categories where Target gets most of its profits from (clothing, soft goods, home goods) were closed and sent all of that business to Target. It was an absolute massive windfall for Target.

In some states (MI as I recall) stores like Target or Meijer had to actually rope off toys/clothing as "non essential categories" as they were not allowed to sell those items during the lockdown. CA was not the most strict state when it came to COVID rules in my opinion.

Malls across the US were closed. Indoor shopping was closed longer than other retail. Entire malls were still closed in CA in the fall of 2020 (anchor stores with exterior entrances were open by then). I explicitly remember going to Sears in Sacramento at some point then (maybe it was August or September but pretty sure it was in the fall) and Arden Fair Mall was still closed due to the indoor malls still being prohibited. I think in Reno the mall had opened back up by that point, but not all stores inside the mall were open yet or ran very limited hours.

But Target- jam packed... and online orders blowing up... during that entire 2020 period the moment lockdowns started and that momentum continued well into 2021 even after everything else opened back up.

All of that occurred in 2020. By 2021, if anything was still closed, it was for business reasons, as political pressure to stay closed was basically zero by then.

The panic buying had also subsided by mid-2021 at the latest.

I doubt Target and other "essential" stores would still be riding on that momentum a year later.

[buckguy]

COVID lockdowns didn't affect retail after mid-2020. In California, the initial lockdown in March of that year included non-essential retail, but subsequent lockdowns going into 2021 exempted all retail. Other states were even less strict.

I don't think you remember how things worked. There was major political pressure on these chains to CLOSE during COVID whether the state told them to be closed or not. Any chain that tried to stay open was getting roasted by the media and parrot talking head politicians, it was going to kill its customers, kill its employees, etc.

Malls were closed everywhere. So the major retail chains for clothing/home goods/etc. all caved in and closed. Stores that did not have to close, still closed. For instance World Market closed- didn't have to (since they have food- essential good) but they did. Macy's was 100% closed (except if you ordered on Macys.com). Kohl's was closed. Dillards eventually closed and let Wal Mart borrow its employees.

Hobby Lobby attempted to stay open arguing they had essential fabric to make masks (nice try) but they were closed down by local authorities in some markets and eventually closed all stores chainwide. Michaels and Jo Ann voluntarily closed ALL stores.

Home Depot/Lowes stayed open. As I recall all of the auto parts stores and office supply stores, stayed open... Big 5 was open very limited hours where they were allowed (closed about half of their stores as I recall)... of course Dick's closed as they have to follow the orders of the media/parrots... so where I am going here is the stores competing with Target in categories where Target is weakest, stayed open. But the stores competing with Target in the categories where Target gets most of its profits from (clothing, soft goods, home goods) were closed and sent all of that business to Target. It was an absolute massive windfall for Target.

In some states (MI as I recall) stores like Target or Meijer had to actually rope off toys/clothing as "non essential categories" as they were not allowed to sell those items during the lockdown. CA was not the most strict state when it came to COVID rules in my opinion.

Malls across the US were closed. Indoor shopping was closed longer than other retail. Entire malls were still closed in CA in the fall of 2020 (anchor stores with exterior entrances were open by then). I explicitly remember going to Sears in Sacramento at some point then (maybe it was August or September but pretty sure it was in the fall) and Arden Fair Mall was still closed due to the indoor malls still being prohibited. I think in Reno the mall had opened back up by that point, but not all stores inside the mall were open yet or ran very limited hours.

But Target- jam packed... and online orders blowing up... during that entire 2020 period the moment lockdowns started and that momentum continued well into 2021 even after everything else opened back up.

All of that occurred in 2020. By 2021, if anything was still closed, it was for business reasons, as political pressure to stay closed was basically zero by then.

The panic buying had also subsided by mid-2021 at the latest.

I doubt Target and other "essential" stores would still be riding on that momentum a year later.

The issues in retail during 2021 revolved around getting inventories in balance. The delays in shipments were easing, but it meant that there was overstocking of previous seasons' goods that had been delayed and gluts of items like exercise machines that had been popular during lockdown. That kind of thing was sorting itself out, but it affected virtually everyone. I looked up Target's financials and their online sales actually declined in fiscal 2021.

https://www.cnbc.com/2022/03/01/target- ... nings.html



Travel was the sector that was still having problems---I even received a complimentary upgrade on United in Spring of 2021--that hadn't happened in many, many years----because they wanted to reward premium flyers. In-person professional meetings were starting to happen, but there was a lot of apprehension.

[storewanderer]

All of that occurred in 2020. By 2021, if anything was still closed, it was for business reasons, as political pressure to stay closed was basically zero by then.

The panic buying had also subsided by mid-2021 at the latest.

I doubt Target and other "essential" stores would still be riding on that momentum a year later.

Yes, Target rode that momentum well into 2021. Customers got used to shopping there in 2020 and even after other places opened back up many continued with Target.

Also recall as those other places opened back up they ran limited hours. You'd go into them and they'd have minimal staff, the vibe was just off, Bed Bath and Beyond was tanking, these department store and other chains had cut marketing due to the losses from being closed during lockdowns, meanwhile you had the fully stocked vibrant alive feeling Target who kept good hours- 10 PM etc. and was spending a ton of its windfall on marketing to keep reaching the customer. Target got handed a great hand and played its hand extremely well in 2020-2021.

This is not unlike how Stater got such great momentum out of the SoCal strike in 2005 or whenever it was. By your logic above once Vons/Ralphs/Albertsons reopened Stater should have reverted back to "that underperforming barely profitable (go review their old financials- they had public debt and issued financials to the public) chain of plain jane stores that are like a step child to the major chains" but that did not happen- Stater picked up momentum when the other chains were closed and kept that momentum going for decades after... put money into the stores on remodels, invested in labor, invested in improving quality/mix... and to this day that is continuing.