Target Corp. will invest up to $5 billion to continue scaling its physical, digital, fulfillment and supply chain operations in 2022.
The discounter plans to open approximately 30 stores, ranging from mid-size locations in dense suburban areas to small-format stores in city centers such as Charleston, S.C., and New York City’s Times Square. This flexibility enables Target to open stores of any size to meet community needs.
In addition to new stores, Target will build on the company's remodel program with 200 top-to-bottom renovations of its existing fleet. (The remodel program has reached more than half the chain since the initiative started in 2017.)
The investments include modern design elements such as brighter lighting and elevated merchandise displays along with enhanced hold space and pickup areas for online fulfillment. On top of the full-store remodels, Target will complete hundreds of smaller projects across the chain to support the growth of its fulfillment services and expanding in-store brand partnerships.
Other details of Target’s investments are below.
• Ulta Beauty at Target: Following the opening of 100 Ulta Beauty at Target shop-in-shops in 2021, the company is planning to open more than 250 new locations by the end of 2022. The retailer said it plans to operate at least 800 Ulta Beauty at Target locations over time.
• Target's ongoing technology investments fuel growing digital capabilities such as Roundel, which optimizes advertising placements on Target.com to deliver a more relevant, personalized customer experience and create value for partners. Roundel drove more than $1 billion in value in 2021, and the company expects that to grow to more than $2 billion in the next few years.
• Technology enhancements in 2022 will also enable customers to purchase Supplemental Nutrition Assistance Program (SNAP)-eligible grocery items on Target.com, building on the SNAP payment capabilities in stores. With this functionality, guests can shop for SNAP-eligible items online and choose Target's free, same-day services Drive Up and Order Pickup.
Fulfillment Capabilities and Replenishment Capacity
• Since 2019, Target's same-day fulfillment services have grown nearly 400%, accounting for more than half of the company's $13 billion digital growth. This year, Target will continue enhancing its same-day offering by adding Starbucks orders and merchandise returns to its Drive Up service in select stores ahead of the holiday season. It also is expanding its back-up item option for pickup orders to more categories.
• Target continues to invest in sortation centers, which enable a next-day shipping capability in dense markets and allow the company to further scale its stores-as-hubs strategy. The company is expanding this model beyond Minneapolis, with five more facilities operating across Dallas, Houston, Austin, Atlanta and Philadelphia by spring and another five planned to open later this year.
• Target also opened two new distribution facilities in 2021 to support the increased inventory flow to its stores. The company has another four facilities currently in development to expand supply chain capacity, with plans for several more in the next few years.
"Years of investment in our team and business have driven our sales beyond $100 billion and positioned Target to meet the needs of our guests no matter how they choose to shop," said Michael Fiddelke, CFO, Target. "We see substantial opportunities to build on our core capabilities to drive deeper guest engagement and long-term growth."
Target revealed its 2022 investment plans the same day it released its fourth-quarter and full-year results. The chain notched its 19th straight quarter of comparable sales increases, with an 8.9% increase in the fourth quarter. During the full fiscal year, comps grew 12.7%, adding to the previous year's growth of 19.3%, on a comparable traffic rise of 12.3%.
On Monday, Target announced a wage hike and expansion of medical benefits.
[Read More: Target to hike wages up to $24 an hour]