Target's standout performance during COVID-19 aided by digital decisions made in 2017

Target acquired Shipt and Grand Junction in 2017 and set the stage for being a standout retailer in the COVID-19 pandemic. There's always a bit of luck in digital transformation.

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There may not be many brick-and-mortar retailers that make it out of the COVID-19 pandemic, but it's safe to say Target will emerge stronger thanks to decisions it made in 2017.

Here's what happened in 2017: Target bought Shipt for $550 million just a few months after buying Grand Junction for its supply chain and delivery platform. Grand Junction gave Target a platform and transportation and supply chain analytics and Shipt gave it foot soldiers to deliver locally.

You can pretty much name the retail standouts in the pandemic. Amazon is an obvious winner. Walmart is a go-to store due to groceries as well as staples. Costco enjoys a similar position. And Target has shined with its own spin that revolves around staples, food, supplies and delivery that puts it on par with the likes of Amazon.

And you can also see the waiting line at the retail cemetery as well-known names such as Macy's, JCPenney, Gap and a host of others raise capital and struggle. But why pick on those retailers? Any retailer without a strong digital operation ahead of COVID-19 is hurting.

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I can't help but think back to 2017 every time Target gives an update where it notes same store sales are up and profits are being squeezed largely because it is taking care of its employees and folks aren't buying apparel.

Target on Thursday said it would extend $2 an hour temporary wage increases and other benefits through May 30. Target previously announced a $300 million investment in wages, bonuses, paid leave and benefits. Target added that it is seeing record digital growth topping 100%, strong demand for same store fulfillment and market share gains. Same store sales quarter to date are up more than 7%.

Target CEO Brian Cornell said:

Because of our strong business model, we are able to make considerable investments to support our team, put protections in place, and adjust to serve our guests who are being advised to shelter in place and avoid stores. As a result, we are seeing record-setting digital growth, strong demand for our same-day fulfillment services and broad market-share gains across each of our core categories.

Now Target is seeing profit squeezed as shoppers buy more food, beverage and essentials over apparel. Target is seeing buying behavior shift in real time amid stock-up shopping and shelter in place orders. In March, Target saw same store sales surge more than 20%.

Today, Target looks like it's ahead of the game courtesy of a digital transformation crystal ball as well as a culture that wants to innovate, but it's worth going back further to 2013 when the retailer suffered a massive data breach.

Why? That breach in 2013 forced Target to change management and get its IT act together in a process that took about two years. Leadership has changed over time, but Target had to get technically savvy to survive and keep its customers. We've seen this movie before as Home Depot stepped up its IT game after a breach and now even Equifax is delivering strong quarters in part to the investments it made after its breach.

It's clear that those firms that were investing in digital transformation pre-COVID-19 are going to emerge stronger. But if you look at the history of some of these companies it's also clear that many of them were educated in the school of hard IT knocks.