Expectations of a 1% to 3% increase in third-quarter same-store sales are due in large part to the continued success of the company’s P-Fresh remodel program, which adds fresh departments to older stores along with upgraded merchandising in such key departments as home, beauty, electronic, video games and shoes. The company completed 116 remodels in the second quarter and now operates more than 300 of its 1,743 stores in the P-Fresh format.
Going forward, the increased frequency at which shoppers visit the P-Fresh stores is expected to be a powerful contributor to sales growth. However, the true test of Target shoppers’ loyalty will come this fall when the retailer launches its new 5% rewards program nationwide and expects the program to contribute a full percentage point for fourth-quarter same-store sales.
The 5% rewards program has been in pilot mode in the Kansas City market, and CFO Doug Scovanner said results there have been, “fascinating,” especially among shoppers who were already among the company’s most loyal.
“Our aggregate experience in Kansas City continues to validate our belief that this retail segment loyalty strategy will add about a full percentage point to fourth-quarter sales and between one and two full points to sales next year,” Scovanner said.
To ensure that happens, look for Target to put the full weight of its marketing muscle behind the mid-October launch of the rewards program.