Target (TGT) is Still Undervalued. For the last five years
or so, the demise of retail brick-and-mortar establishments has been predicted.
Every year, it appears that a large number of brick-and-mortar stores have
shuttered their doors. Thirty store chains have filed for bankruptcy in 2020,
according to retail diving. Guitar Center, GNC, J.C. Penney, and Neiman Marcus
are the ones you may have heard of. Retail customer experience is developing,
according to retailcustomerexperience.com, and companies focused on authentic
in-store experiences will succeed. Target (TGT) is one of them as you will see
the company has developed key online value adds to their stores. Target is
growing by driving traffic and volumes during the pandemic. The stock price is
up ~65% in the past 1-year but Target is still undervalued.
Target’s Move Online
Most people think of Target as just a physical shop, but the
retailer now has an online presence that is rapidly growing. When it comes to
online experiences, it appears that Costco (COST), Walmart (WMT), Target (TGT),
and CVS (CVS) have taken some of Amazon’s market and established a niche.
Target has been one of the hottest retail companies in 2021 during this period,
outperforming Amazon (AMZN) , Costco, Walmart, and Home Depot (HD) over the
previous year.
During the pandemic, Target’s hybrid strategy of a
bricks-and-mortar shop with a continuous online presence was a popular mix with
customers. Target’s same-day fulfillment approach, which merged grocery and
discretionary shopping, also had exceptional results. Target’s fulfillment
centers/stores are now able to produce additional income and operational
leverage as a result of this increased online retail capability. Amazon and
Walmart are unique in that they both have their distribution hubs for the
majority of their online orders. Rather than relying on distribution hubs,
Target relies on its stores which is a less expensive and a much speedier
option.
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