Amid the chaos of the pandemic, Target was deemed an essential business for its ability to provide consumers everything from food, cleaning supplies, and medicine to child-care items and equipment for remote work and elearning. The company’s omnichannel presence, adaptability, and accessibility not only delivered families the items they needed to weather this difficult time, but also paid off with record-setting revenue growth.

Insider Intelligence broke down some of the key findings from Target’s 2020 Annual Report, as well as what the retailer is planning in 2021 to continue strengthening its position in the retail market.

Target’s annual revenue pushes them to top US ecommerce companies 

Target had a record-breaking year for revenue growth in 2020, as the pandemic pushed consumers to migrate to omnichannel experiences for all their shopping necessities. Target’s annual revenue in 2020 topped $93 billion, a nearly 20% increase from the previous year.

Since 2019, Target’s online sales have surged nearly 175%.

Total 2020 sales surpassed $92.4 billion, with the most popular categories including beauty & household essentials, home furnishings & decor, apparel & accessories, hardlines, and food & beverage (amid 2020’s surge in online grocery adoption). 

The big-box retailer’s ecommerce growth, in particular, has been extraordinary. Since 2019, its online sales have surged nearly 175%. Insider Intelligence estimates Target’s US ecommerce sales will grow to $18.64 billion—almost as much as all its US ecommerce sales from 2016 to 2019 combined—pushing it from No. 8 to the No. 6 spot of our top 15 ecommerce companies forecast.

Target’s ecommerce sales will top $18 billion in 2021. - Insider Intelligence
Target’s ecommerce sales will top $18 billion in 2021. Insider Intelligence

Click and collect and curbside pickup bolsters Target’s sales growth 

Although Target has seen a massive jump in ecommerce sales, CEO Brian Cornell said during the company’s Q1 2021 earnings call that more than 95% of the quarter’s sales were still driven by the brick-and-mortar stores. Much of this can be attributed to the rise in click and collect, also known as “buy online, pick up in-store,” and curbside pickup options.

According to the earnings call, Target’s curbside pickup as a share of digital sales increased by more than 600% in Q1 2021 compared with the same quarter in 2019. Recognizing that consumers seek more flexibility and convenience in their retail experiences, the company said it would continue to invest and expand on this service.

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Target’s digital ad platform budget plan 

In addition to retail sales, Target’s annual revenue will be bolstered by digital advertising. Long dominated by the Google-Facebook duoply, the digital ad market is getting some new players in an emerging segment: retail media platforms. Naturally, Amazon is the biggest player in this growing cohort, followed by Walmart and Instacart. Target’s digital ad business falls into the next tier, which includes large digital marketplaces like eBay and Etsy, and multichannel retailer, Kroger.

Retail media has a key advantage over Facebook and Google, as their platforms are powered by the combination of high-intent keyword searches and shopper data, giving them an even better ability than their duopoly counterparts to target the right customers with ads.

Target joins a cohort of next-gen marketplaces 

Online marketplaces—two-sided platforms joining buyers (the demand side) and sellers (the supply side)—have proven to be among the most profitable retail business models, as Amazon and eBay can attest. While those two have long been the primary players in ecommerce, Target is positioning itself among the next crop of retailers carving out their place in the market.

The challenge in growing a marketplace is jump-starting the network effect, wherein more buyers attract more sellers, which then attract more buyers, creating a virtuous cycle. And with stiff competition from Amazon, the only possibility for Target to scale a next-generation retail marketplace is through differentiation.