Target to cut thousands of jobs as it shifts focus to digital

A month after it closed all of its stores in Canada, US general retailer Target has confirmed that it is to slash ‘several thousands’ of jobs over the next two years in a bid to save US $2 billion.

As part of a widespread restructuring, Target said it would be concentrating on growing digital sales by 40% in 2015, forecasting that this would drive a 2% to 3% growth in its total business. Target’s digital sales grew by 38% in 2014.

The news from the significant stockist of music products in the US came in a call with analysts and investors earlier this week.

CEO Brian Cornell and members of his leadership team outlined the strategy that they hope will transform the retailer’s business.

The digital push doesn’t necessarily mean a zero-sum game for retail: Connell said that customer who shop both in-store and online spend up to three times to those who shopped in-store only. Digital sales accounted for 43% of income over the latest holiday period.

“Following a thorough, strategic review of our business, coupled with a careful evaluation of the changing retail landscape, we have identified the key initiatives that will put Target on a clear path to growth,” said Cornell.

Most of the job cuts will be focused on Target’s HQs in Minneapolis and India, rather than from store staff.

In a bid to help the retailer ‘move with more agility’, it will establish centralised teams and ‘eliminate several thousand positions over the next two years’.

This year, Target expects to invest between $2 and $2.2 billion in capital expenditures, including a $1 billion investment in technology and supply chain.

Added Cornell: “While we’re in the early days and there’s no doubt that transformation can be challenging, we’re taking the steps necessary to unleash the potential of this incredible brand,” said Cornell. “I’m encouraged by our early momentum, and am confident that by implementing our strategy, simplifying how we work, and practicing financial discipline, we will ignite Target’s innovative spirit and deliver sustained growth.”Music Business Worldwide

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