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Target has spent 100s of millions of dollars on their omnichannel initiative in order to keep up with Amazon.  The ominichannel phenomenon is the ability to compete through brick and mortar and online by redesigning distribution networks and streamline supply chain operations to best serve customers on and offline.  Those that don’t get it right face extinction like JC Penny.

Bank of America estimates Amazon generated $79.8 billion in U.S. gross merchandise volume in the fourth quarter of 2019, up 19% from a year ago.  Bank of America also estimates Amazon currently has about 44% of U.S. e-commerce market share, up from 40% in 2018, while Target has just 2%.

Now it may not seem like that money Target spent is adding any value based on the numbers, but it is.  When Amazon announce 2 day shipping for prime members, Target started offering 2 day shipping shortly afterwards.

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And when Amazon announced last year that they were investing heavily in their supply chain to offer one day delivery, Target followed suit. 

<blockquote>

Target announced today that US customers — with some geographic exceptions — can now select same-day delivery for orders placed directly through its website that total more than $35 for a flat fee of $9.99, or for free if they’re already a member of shopping app Shipt.

The company has been building out its same-day infrastructure for just over a year since it acquired Shipt. A spokesperson tells The Verge that as of earlier this year, it had expanded Shipt service to 47 states and 1,500 stores earlier this spring, and it’s implemented and expanded options like order pickup (where someone can place an order online and have it waiting for them at the physical store) and drive-up pickups (where you order an item and have a staff member bring it to your car).

</blockquote>

<center><a href="https://www.theverge.com/2019/6/13/18677980/target-same-day-delivery-website-online-shopping">Source</a></center>

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Target is also using mobile as part of that omnichannel strategy.  Target developed the Cartwheel app to compliment the Target app. Cartwheel allows users to build shopping lists that enable them to find everything within Target’s brick-and-mortar locations.

In November, Target just killed their third quarter earnings and raised their full year guidance.  On the news, Target rose more than 14% up hitting an all-time intraday high of $127.20.  The company said digital sales surged 31% during the quarter, with its same-day delivery options including buy online, pick up in store and curbside pickup accounting for 80% of digital sales growth.  CEO Brian Cornell the results were “further proof of the durability” of Target’s investment strategy…omnichannel strategy. 

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Yesterday, I noticed some huge call buying as the Smart Money bought over 36, 000 of the February 28th weeklies with a strike price at $121.  I thought it might be an earnings play, but they don’t announce earnings until March 4th.  
With this amount of call buying, I would love to jump in, but I think I’m going to sit this one out and watch from a distance.   However, I won’t be surprise to see the stock price up more than $121 within the next two weeks.

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This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
 
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