Dive Brief:
- Target reported higher inventory productivity in Q1, with inventory turns up 10% year over year, EVP and COO Lisa Roath told analysts during a May 20 earnings call.
- The gains come as the retailer pushes to improve connectivity between its upstream and downstream processes across its operations to improve inventory reliability, Roath said.
- “That means starting with optimized merchandising decisions that impact how product is received within our network and how that product flows through the system,” Roath said.
Dive Insight:
Improving inventory positioning remains a key focus for the retailer, with demand forecasting, artificial intelligence and machine learning among its target investment areas. High level, CEO Michael Fiddelke said that Target “rather be chasing inventory a little bit than canceling inventory.”
As part of those efforts, the retailer has also worked to grow its upstream network capacity, including a new food distribution center in Colorado, Roath said.
Additionally, Target opened its Houston Receive Center earlier this month, which is expected to process around 25 million cartons annually. The facility is the first of its kind for the retailer, and aims to provide more holding capacity and network flexibility.
“What we like about that is that it gives us the flexibility to hold more long lead time, import seasonal inventory upstream and then distribute that closer to the time when the guest needs it,” Roath said.
Target also recently announced the appointment of Jeff England as EVP and chief global supply chain and logistics officer — someone with a “proven track record of improving availability,” Roath said. In his new role, which is slated to start later this month, the retailer hopes England can advance on its larger turnaround plan. In the past, Target has grappled with in-stock reliability following a struggle with excess stock in 2022 which damaged the retailer’s financial performance.
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