Two of the biggest retail chain stores, Walmart and Target, are doing something that Wall Street really doesn’t like. In fact, if you believe Wall Street they’re crazy to do it and it’s a complete waste of money. What could they be doing to get that response? Re-investing in their business.
Walmart is remodeling 500 stores this year, opening a few more and spending $20 billion to do it. Target started to spend $7 billion in 2017 and is remodeling 600 stores along with a couple other activities. We won’t know the results for Walmart for a while but we already know what is happening at Target.
Was it doom and gloom? Wall Street thought so and sent Target shares 12% lower when they announced what they were going to do last year. Now a year later, Target is looking pretty smart. The number of shoppers visiting Target jumped by 3.7% which was their biggest quarterly growth in a decade for that metric. Feedback is also showing higher customer satisfaction numbers at the remodeled stores because the shopping experience is nicer.
You may be thinking “that’s nice, but show me the money.” Target can do that too. Their same store sales grew by 3%.
That number is even more impressive when considering that for the same quarter a year ago they experienced a decline of 1.3%. The news gets even better. They’re not done with the remodel so the new numbers should keep getting better.
Does it cost to make improvements to stay fresh and keep the customers coming in the door? Yes, it does. However, the results can pay for themselves and keep your business a growing and healthy business where customers actually enjoy shopping. Seems pretty smart to us!
