storewanderer wrote: ↑March 5th, 2024, 9:55 pm
Is Circle going to automatically add offers for those on paid memberships, or even for those with a basic/free Circle account, all offers will automatically apply?
I wonder if this is the beginning of making all sales prices "Circle" so the customers who don't join will just pay full price for everything.
Wall Street loved Target's huge profit beat in their earnings report but I couldn't help but notice the negative comp store sales result... even after all the price hikes that number being negative strikes me as extremely troubling.
They cost cut their way to success and Wall Street loved it. They are talking growth now. With such poor sales numbers they will have a blow out next year in the same period (I hope, for their sake), which I am sure Wall Street will love again.
First, yes they said the free Circle membership is going to automatically take care of all those offers posted in store. This really never should have been an app requirement at Target for posted sale prices. They even use the language "We heard you, Circle sale prices are going to be automatic now" although they hint that personalized offers (like spend $75 three times in a month and get $20) will still need to be turned on in the app.
I could see it moving towards all sale prices being Circle, but in a way they've already acknowledged they did too much already with required jumping through hoops. I suspect that they are going to heavily cut back on the single item discounts with Circle and only do a few broad offers "like 20% off all shoes this week with Circle". I think they are trying to remove complications.
So now reading the fine print, what I originally heard turned out to be completely accurate. Target Circle 360 really
is Shipt offered with a different name and is actually the same $99 a year price. However it is $49 for the first year for new members with a RedCard (soon to be rebranded as CircleCard which I think is a big mistake for many reasons). Target Circle 360 will include all of Shipt not just Target, so if you buy it then you will get free delivery from category competitors like PetSmart, Petco, CVS, Walgreens, and Sephora all at "store shelf pricing" aka no markup like Instacart applies. I was surprised that they are not worried about potentially sending business to these competitors. But I also wonder if this means they are going to kill the Shipt name entirely and how those stores would feel about having a gig worker wearing a "Target 360 Shopper" shirt roaming their aisles. I think they might lose some of these competitors like the pet stores and Walgreens. And how does their new partner Ulta Beauty feel about Target Circle 360 delivering Sephora product at shelf price in an hour? I have to think that in a year or so Shipt name will be totally gone and renamed Circle 360 which will only deliver Target, CVS, and probably Ulta. Then the question becomes is it still worth $99 if it delivers less stores than it used to when it was Shipt?
As far as sales go, I am not exactly surprised because remember the year before Target had swung from inventory shortage to inventory overload. They were sending entire truck loads to liquidators and their aisles were packed with clearance buys. They're going up against those inflated sales with very bad margin figures; I thought they lost money same quarter last year due to all the clearance especially big electronics blowouts? I got a Samsung TV for $100 less than Costco plus a free $75 gift card last year same quarter and they had TV sets stacked all over the store including all through apparel due to over buying. I think Wall Street understood for once this is a good case of negative comps as they were going up against the clearance blowouts.
So I do not see anything in last quarter as cost cutting their way to profit except for the fact that they weren't running a glorified liquidation sale for the entire quarter this year. They did roll many price cuts in foods especially their "key categories" like dairy and yogurt, snack bars, and cereals which may have also reduced comps. They did not discount sodas as much as the past, and I just have to assume this was a choice to give up sales instead of running a loss leader as in the past.
The thing that leaves me with a queasy feeling is knowing they are intentionally trying to push customers to choose the gig worker services over their own employees services. I think they are going to be more successful in this endeavor than Walmart has been with "plus" because of the positive reputation Shipt has. This unspoken push might be good for the store experience for the customer in the short term as workers are not pulled off registers to pull unprofitable eCommerce orders as much as before. Until they realize that they can cut those hours later and fatten the profit line for Wall Street...
The idea that retailers are trying to push work onto gig workers makes me uncomfortable when I think of how much abuse can come from it. There are also gig work apps like "Field Agent" currently available that are intended to generate exception reports for retailers and reduce the need for District Managers and even Store Managers... Apps that tell customers to look for certain items and take pictures of them in a store, or take pictures of the price tag or even the entire aisle. This in turn becomes the validation work that the Manager used to do like checking if the new planogram was set correctly, price changes completed, recalls done etc.. You get something like ten cents per picture and the offer is aimed at customers (who become gig workers) as "you're already shopping at XYZ store, go on a treasure hunt for us while you're there and get paid!" Again good companies could use this tech to make life easier for their employees and managers, but bad companies can start using this to eliminate positions, justify these "multi unit store manager" jobs that snuck up in the past at companies like Toys R Us and such. Instead of having the District Manager visit now they can just use these apps to have someone at the corporate office email out the s___ list that "Store 123, 456, and 321 didn't set the new display and Store 789 didn't finish their price changes." And we know the bad actors who would work this way outnumber the good guys... I just see work being pushed off to below minimum wage gig workers, which is worsened by the fact that as the store workers start to lose the "thinking" part of their jobs like validation tasks and such that make them understand how the business works and why their jobs are important. Ultimately the stores get worse as the experienced people who understand what matters in retail lose their jobs. There become less Store Manager, District Manager, Regional Manager etc. positions one can work to get promoted into, accelerating the talent loss the entire industry is struggling with. None of this is good long term, unless you're a Wall Street fat cat.