Lesson Learned: Why Target Purposely Keeps Its Checkout Lines Long
Have you ever stood in a long line at Target (NYSE:TGT), wondering why the retailer simply doesn’t just open more lanes? It seems as though no matter what Target store you go to, the location’s center three checkout stations are always packed, but the outer registers are never opened. Odd. If grocery stores can figure out the system, why can’t Target? Belus Capital Advisors’ Brian Sozzi might have the answer to your question – according to him, the company might be consciously keeping some of its lanes closed to beat us at our own shopping game.
Sozzi penned an eye-opening report on Monday that effectively cleared some things up for a lot of loyal Target consumers. In his explanation, although Sozzi recognized the possibility that certain Target lines are long because stores are now full of built-in excess capacity on account of mobile consumption and the holiday season security breach, he shared his belief that it is more likely that Target is actually purposely keeping its outer lanes closed in order to maximize what its customers are spending at its stores.
Sozzi wrote that by channeling all of its customers into only the center lanes, Target is able to ensure they walk by tempting end caps that offer name-brand merchandise that the customers may not need but may be tempted to buy because of the promotional being run. Hello, impulse purchases.
What’s more, because longer Target lines give customers more time to deliberate and think back over what’s in their carts, they can be more likely to run back into the aisles and pick up that Target item they really don’t need but actually really want. Sozzi also pointed out that Target’s apparel section is purposefully in line to the checkout registers so that as customers wait to check out, the merchandise can catch their eye, and they will be more likely to pay it more attention — and maybe subsequently buy.
Of course, that explanation is only one analyst’s take on things going on over at Target. The insight is interesting on account of the retail struggles the company has faced recently, though. The company’s data breach that compromised credit and debit card data for up to 40 million people and personal data for up to 70 million customers in December has kept many concerned customers out of stores, and the security theft also set Target behind significantly, because the retailer did not perform as well in the holiday quarter as it planned and expected to.
That’s why it is now more important than ever for Target to bounce back and register impressive sales. In the face of more competition from rivals like Wal-Mart (NYSE:WMT) and Amazon (NASDAQ:AMZN), keeping Target’s lines full and its consumers impatient might be the retailer’s best bet.
Still, Target should be sure not to make its customers too annoyed, because the company still has a lot of ground to make up and already has many frustrated consumers on its hands. Recent dissatisfaction with Target has been evident in the retailer’s latest sales reports, and Target reported last month that its traffic has dropped significantly since its large-scale data breach in December. According to the consulting group Kantar Media, Target’s customer traffic in January — online and in stores — fell to its lowest point in three years, and 33 percent of U.S. households shopped at Target in January, while 43 percent visited the store in January 2013.
Those are devastating figures for Target, but now the company needs to move forward and turn things around. As Sozzi suggests, Target executives may believe that the best way to do that is by pushing more purchases on the customers that do still visit Target stores, but whether that strategy will be a successful one is still up in the air.