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Target gets unexpected sales boost

BY Marianne Wilson
MINNEAPOLIS — Target on Thursday surprised the industry and investors with some good news.
 
The discounter updated its guidance and said that as a result of improved traffic and sales trends through the first two months of the quarter, it expects to report a modest increase in its second quarter same-store sales. Target previously said it expected a decline. 
 
"Following better-than-expected results in the first quarter, we’ve seen additional, broad-based improvement in traffic and category sales trends in the second quarter, despite continued challenges in the competitive environment," stated CEO Brian Cornell. “Our team is energized and focused on enhancing and modernizing the Target shopping experience, and our guests are responding."
 
Cornell said the company's launch of its nursery decor line, Cloud Island, in May was a success. Target will be rolling out four more exclusive brands across home and apparel during the coming months in support of its plan to launch 12 new brands by the end of 2018. 
 
"We are also pleased with initial results of the Twin Cities rollout of Target Restock, providing next-day delivery of a shopping-cart-sized shipment from an assortment of more than 10,000 essential items," Cornell added.  
 
In updating its guidance, Target said it now expects to report second quarter GAAP and adjusted EPS above the high end of its previous guidance range of $0.95 to $1.15.
 

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Back-to-school shoppers starting early, shifting to mass

BY David Salazar
NEW YORK — Retailers who wait until late summer this year to launch back-to-school deals are only hurting themselves, because early shoppers will spend more than late starters. 
 
That's according to Deloitte's "2017 Back-to-School Survey," which also detected a big shift in where back-to-school will be shopping this year. One thing that hasn't changed: In-store still prevails. 
 
Sixty-percent of back-to-school shoppers plan to hit stores by the end of July, spending an average of $532, which is 16% higher than the remaining 40% of parents who will start shopping in August or later, according to Deloitte. Those later shoppers are projected to spend only about $458 per student. 
 
Deloitte, which polled 1,200 parents of school-aged children in grades K – 12, found that shoppers expect to spend an average $501 per student on back-to-school this year, on par with last year. The total spend is expected to hit an estimated $27 billion.
 
The survey revealed a shift in where parents will be doing their back-to-school shopping. The majority of survey respondents (81%) plan to shop at mass merchants, a 24% increase over last year. Off-price stores also gained fans, climbing to 28% from 10% in 2016.  
 
Department stores and specialty apparel stores, however, are losing favor. Twenty-eight percent of respondents plan to shop traditional department stores this back-to-school season, down significantly from 54% last year. And only 8% of parents plan to visit specialty clothing stores, falling from 25% in 2016.
 
The survey also picked up a shift in the type of goods parents are buying this back-to-school season. Clothing and accessories are expected to account for 55% of families’ spending this year — up 10% from last year — mostly at the expense of school supplies and computers.
 
“With today’s technology-based education system there is less need for traditional school supplies, likely contributing to the shift toward more spending on clothing and accessories before children head back to school,” said Rod Sides, vice chairman, Deloitte LLP and U.S. retail, wholesale and distribution practice leader. “Part of this shift may also come from the popularity of preconfigured school supply kits, which 30 percent of families plan to use."
 
Deloitte recommends that retailers make an effort to target the “undecided” back-to-school shopper — that is, shoppers who don’t know whether they will shop online or in-store. Such shoppers are more likely to choose retailers that offer free shipping (68%), buy online and return to store (52%), and offer loyalty programs that provide faster or cheaper discounts when shopping online (49%), the study found. 
 
“Retailers should aggressively pursue the ‘undecided’ consumer because they collectively represent nearly $5.4 billion this back-to-school shopping season,” Sides said. “This segment is up for grabs but likely to go to retailers that draw customers in early with promotions and digital experiences that make store visits even more attractive, like inventory visibility, order tracking or buy online/pick up in store.”
 
For more findings, click here. 

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Walmart’s tech incubator holds virtual commerce contest

BY David Salazar

BENTONVILLE, Ark. — Walmart’s technology incubator — called Store No. 8 — is on the hunt for cutting edge virtual reality (VR) solutions.

In an effort to uncover new VR applications — and innovative ways to apply the technology to commerce — Walmart’s Store No. 8 is partnering with Thrive Global and Accenture to create a nationwide competition for developers. Called Innov8: V-commerce, the contest invites start-up companies to submit ideas that have the potential to change the way people shop and live, according to Walmart.

Selected winners will receive capital to fund development costs and strategic advice during incubation of their concept, along with an opportunity to work with Walmart, Jet.com, Thrive Global and other retail partners. The most innovative experiences will be showcased at an exhibition in Los Angeles on October 18.

Innov8’s board will include Katie Finnegan and Seth Beal, Principals of Store No 8; and Marc Lore, president and CEO, Walmart U.S. e-commerce and founder and CEO, jet.com. It also will include Arianna Huffington, founder and CEO of Thrive Global; and executives from Accenture Labs, Forerunner Ventures, and the Virtual Reality Fund.

“Our first step is to identify the most innovative companies and minds in the space to help us on this mission,” said Katie Finnegan, principal of Store No 8. “Innov8 will further define the future of commerce by inspiring and driving growth in the underlying ecosystem of technologies needed to bring shopping into the era of virtual experiences.”

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