Target Corp. plans $2 billion in cost cuts over the next two years through corporate reorganization and other improvements.
The goal is to make the Minneapolis-based discounter more agile to compete in an increasingly competitive landscape and appeal to shoppers who are buying and researching on their mobile devices.
As part of the plan, Target will eliminate several thousand positions, primarily at its corporate headquarters — which employs 13,000 workers, over the next two years and establish centralized teams based on specialized expertise.
Target also plans between $2 billion and $2.2 billion in capital spending for the current fiscal year. That’s in line with what it spent a few years ago, but this year, about half, or $1 billion, will be spent on technology. That’s a big shift from past years when most was spent on new stores and renovations of its fleet of 1,800 stores.
The new focus will help spur Target’s online sales growth to 40 percent, the company said, as well as help fuel a total projected sales growth of 2 to 3 percent this year.
“We have to be more nimble, more agile. We have to create a more innovative culture,” Brian Cornell, Target’s CEO, told analysts Tuesday at a meeting in New York to outline growth plans.
Cornell took over last August and is charged with reclaiming the retailer’s image as a purveyor of cheap chic fashion merchandise. He replaced Gregg Steinhafel, who resigned last May amid a massive data breach that hurt sales and profits.
Even before Cornell took the helm, Target had begun to reassess its operations, sprucing up its baby departments and adding mannequins to its fashion areas. Cornell wants to double down on a handful of areas including fashion, children’s products and home furnishings. It is also rethinking its grocery area and wants to focus on organic, natural and gluten-free and locally produced food.
The moves come after Target lost its way during the Great Recession when it aggressively expanded into basic groceries. That helped drive traffic but diluted its cheap chic image. The company was also dragged down by its failed foray into Canada two years ago. And Target was behind other rivals in e-commerce services.