Target plans on cutting several thousand jobs, most of them from headquarters locations as part of a restructuring scheme aimed at cutting $2 billion in costs for the next two years. Known as a "revival plan," the retailer's cost-cutting move has been outlined by CEO Brian Cornell, who wants to narrow the company's focus to a handful of its key product lines.
Additionally, there is a plan to enhance the retailer's online business segment as an attempt to rejuvenate sales.
According to Cornell, the restructuring will help the company in freeing up resources for future investments in some key focus areas.
"Cutting complexity at headquarters will make us more competitive," said Cornell.
Although the company didn't disclose the number of jobs that will be cut, it is expected that most of them will occur at its headquarters in Minneapolis, where there are 13,000 employees. Likewise, employees at its Bangalore, India headquarters would also be affected by the cost-cutting scheme.
"We have to be more nimble, more agile," said Cornell. "We have to create a more innovative culture."
Cornell also talked about the company's plan to invest as much as $2.2 billion in capital expenditures for the existing fiscal year. He estimated that $1 billion of that investment will be used on technology that he believes would generate a growth in sales by 2 to 3 percent this year. The new focus on technology is definitely a big shift for the company, which, in past years, focused its spending on putting up new stores and making renovations. It now runs around 1,800 stores.
In January, Target announced the decision to shut down its operations in Canada in order to focus more on boosting sales in the U.S. It is also expanding services like shipping its products from the store to expedite deliveries. Moreover, it has slashed 50 percent off its minimum online purchase to the amount of $25 to enable customers to more easily qualify for free shipping. Target stated that during the 2014 holiday season its customers responded to its "no-minimum free-shipping" offer.
Another part of the plan is the shift on creating smaller stores that cater to densely-populated cities. Target is said to be opening eight more of its CityTarget and TargetExpress stores throughout the year.
Since assuming his role in August, Cornell chose to reclaim the company's image as a shopping haven for cheap chic fashion merchandise. The store is reportedly enhancing its baby departments and placing more mannequins in its fashion sections.
Photo: Mike Mozart I Flickr