Target execs ask suppliers to embrace changes in stores and online

Amid all of the changes taking place at Target Corp. in the last year, executives of the Minneapolis-based retailer used its annual vendors summit to rally its partners around its transformation and announce some new digital initiatives.

"We're going to need your partnership and collaboration, and we're going to need to take it to another level," Brian Cornell, Target's chief executive, told the group of about 700 vendors at the Minneapolis Convention Center Tuesday.

Since his arrival as the company's first outsider CEO a year ago, Target ditched its previous goal to reach $100 billion in sales in 2017, set a new goal focused on earnings growth, closed its money-losing Canadian operation of approximately 133 stores and laid off about a fifth of its Twin Cities headquarters staff.

At the same time, he's hoping to build momentum by focusing on increasing online sales, building smaller stores and revamping Target's grocery department.

With the vendors, Cornell and other Target executives focused on changes directly involving the selling of products.

He acknowledged that some suppliers are feeling uneasy about a new prioritization of products for its 1,800 stores, with the categories of style, baby, kids and wellness to get the most emphasis.

That anxiety is being especially felt among packaged-food companies as Target looks to add more natural and organic products to its shelves.

"There's a simple truth: This wellness movement is incredibly important to our guest," Cornell said. "It's a really big space. … It's growing faster than just about anything else."

He asked vendors to help Target stay innovative by launching their new products with it, including exclusives.

And, noting that it's a two-way relationship, he said Target would work harder to make sure their items are well-stocked and easy to find both in its stores and on its website.

"You have my commitment that at Target, our teams will do what it takes to raise the game, to make sure we get the fundamentals right," he said.

Jeff Jones, Target's chief marketing officer, followed Cornell on the stage and touched on a number of digital-related initiatives, including an upcoming test of a grocery delivery service as the company focuses on what it calls "on-demand shopping."

"Now I know that term is probably conjuring up images of sitting at home and ordering up movies on your TV — and that's the point," said Jones. "For years, we called it omnichannel or multichannel, which are clearly widely used in the industry. But what the guest is really looking for is being able to shop wherever they want, however they want, whenever they want. It's on-demand."

Jones did not elaborate on the grocery delivery service other than to say that Target will be testing one "in the very near future."

A company spokesman said the details are still being hashed out.

Amazon.com Inc. has been expanding its own same-day and next-day grocery delivery service called AmazonFresh from some markets in California to areas such as New York City and Philadelphia. In addition, a number of other start-ups such as Instacart have been moving aggressively into this space.

In addition, Target is working to roll out a number of other enhancements to its website as part of the $1 billion the company is spending this year to upgrade its technology and supply-chain infrastructure.

"Guests will be able to see exactly how much of stock we have of a particular item in their local store," Jones told the vendors. "For items they choose to have shipped, we'll be able to commit to when the order will arrive versus just a multiple-day delivery window."

Eddie Baeb, a Target spokesman, said the company hopes to have those two initiatives up and running before the holiday shopping season.

He added that shoppers will only see the number of items in stock at a store when the quantities are in low supply.

Target has also recently expanded its curbside pickup test from stores in the San Francisco area to several stores in New Jersey.

Target is also planning to apply a successful test from this spring to other parts of the home furniture department. In that pilot program in 29 Denver-area Target stores, Target displayed a more extensive assortment of patio furniture, but shoppers had to purchase the items online.

Jones noted that these are among some of the 200 tests the company has going on in various markets around the U.S.

Kavita Kumar • 612-673-4113