In The Age Of Amazon, Target’s Online Growth Is Out Of The CEO’s Hands

Amazon has forced Target’s online growth at the expense of its stores, and it can’t be stopped.

Source: In The Age Of Amazon, Target’s Online Growth Is Out Of The CEO’s Hands

First off, from the 6-month chart below it appears that at least some investors were not that impressed that CEO Brian Cornell’s second quarter earnings call was dominated by the big idea of self-checkout lanes. You know, what 100% of consumers hate the most. Little was said of online growth or how he would make it happen. The stock continued to show weakness and for good reason. Then we had the Trump rally where pretty much everything went up that wasn’t named in the PEOTUS’s twitter feed.

TGT Chart

TGT data by YCharts

Second, perhaps we now realize that people will gravitate to online no matter what the retail company wants us to do. This is a critical paradigm shift in how we think of online growth for specialty retailers. Let’s not go too far with retailers like Macy’s that won’t push people to online channels just because their stores are dirty and inefficient. The reality is simple. When you can buy online and return to the physical store more people will do just that. You think Nordstrom’s was missing the point when they opened a Rack discount store in Albuquerque? I can now buy regular Nordstrom’s goods online and return it to my local Rack. Then of course I pick up some cheap commodities like blue jeans and ski socks. They have me down to a science.

Third, the core problem is usually Amazon. Put simply, every time you and I order from a place like Target or any retailer, there is that nagging feeling to check out the same product on Amazon. If it’s cheaper and easier with Prime 2 day shipping, the specialty retailer loses business. Thus we enter the vicious circle of discounting, free shipping, in-store returns and erosion of profit margins. That is what investors are expressing right here, right now.

If there is only one takeaway today, let that be it. Target has absolutely no choice other than fight Amazon head on with the only advantage they have: physical store locations. If they lose sight of that profits will suffer. Push me to self-checkout lines? I will buy online and erode your margins. Keep a dirty store? I will forget you exist. Control my online versus in-store buying habits? You have no control.

Now we know the number one problem for investors. To put it mildly, the brave new world of maintaining market share or taking it from failed old-line retailers by way of online growth still hasn’t changed the way we value those stocks. In other words, we still treat retailers based on what they earn in profits, not a post-Amazon era of ignoring earnings for online growth. Only Jeff Bezos has a monopoly on that idea. Just ask Alexa.

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Exchange or Sell Gift Cards Pros, Cons

6710868859_ef0cc13ace_zExchange or Sell Gift Cards Pros, Cons

Odds are someone reading this article received a gift card this holiday season. But, what if the card is for a store, restaurant or vendor rarely frequented or nothing appeals to the cardholder? There is always regifting, opting to “purchase” something unlikely to be used, or letting the card languish in a drawer. Now, however, more people are taking advantage of websites that enable them to offload unwanted gift cards. Just be aware of the pros and cons involved when selling or exchanging (and buying resold) gift cards.

The popularity of gift card giving continues unabated, with cards now available for purchased 24×7 in countless stores and online. It is a $127 billion market and an estimated $1 billion in cards go unused annually. The biggest growth areas are digital or e-gift cards that can be sent electronically in minutes, and the burgeoning options for exchanging or reselling gift cards.

Reselling a gift card has grown more common due to the rising number of sites catering to the market: Cardpool.com, Cardcash.com, Raise.com, and GiftCardGranny.com and three big ones. They offer more security to buyers and sellers than turning to Craig’s List or eBay. Some sites allow users to exchange gift cards for ones from other retailers or chains for more of a return than if they opted for cash.

Here are some other things to consider:

Pros

The upsides to selling or exchanging gift cards include:

  • People who sell their gift cards receive far less money than the gift card’s face value. The rates are largely based on supply and demand, and it behooves sellers to shop around for the best deal.
  • The sites allow people to purchase resold gift cards at a discount. (This is a great way to buy gift cards for presents or oneself.) Types offered vary based on what they recently acquired. However, if someone plans to buy something for $100 at a store and can pick up a card worth that much for $90, they saved 10 percent right off the top! The best selling gift cards on CardCash.com include Walmart, Target, Home Depot, iTunes, Macys, eBay, Starbucks, and AMC Theatres.
  • Surprisingly, the cards resold the most in 2016, according to GiftCardGranny.com, include major retailers where anyone could readily find something to purchase. The list contains Amazon, Target, BestBuy, and Macy’s. ITunes and Starbucks are on the list too, but not everyone likes digital entertainment or coffee. The sellers either needed the cash or chose a card they needed more.
  • Reputable gift card exchanges or resellers offer guarantees that the cards are legitimate.

Cons

The downsides include:

  • A huge con is receiving less than the face value of the card being sold. Some sites pay 80 to 90 cents on the dollar for popular cards, but other cards only resell at 50 percent of the face value. That may discourage some sellers, but getting something is better than putting the card in a drawer and forgetting about it.
  • For card purchasers, some cards are only offered for sale (or exchange) at 1 or 2 percent off the face value.
  • Not every gift card can be sold or exchanged. It depends on the popularity of the vendor at which it can be redeemed. For example, a large national chain is generally accepted, but a smaller one or a regional one may not be.

Many people made New Year’s resolutions to improve their finances, shop smarter, or avoid clutter. In spite of the pros and cons, taking advantage of sites that exchange, sell or buy gift cards can be steps in the right direction.

Written and Edited by Dyanne Weiss

Sources:
CardCash: Gift Card Statistics
Cardpool
USA Today: What to do with unwanted gift cards
GiftCardGranny: The Most Resold Gift Card Brands of 2016 according to Gift Card Granny
Today: How to return or exchange holiday gifts that are just wrong

Photo courtesy of 401kcalculator.org – Creative Commons license

 

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