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 a difficult time, but also paid off with record-setting revenue growth.

Insider Intelligence broke down some of the key findings from Target’s 2021 Annual Report, as well as what the retailer is planning in 2022 to continue strengthening its position in the retail market.

Target’s annual revenue places it among top US ecommerce companies

The big-box retailer’s ecommerce growth, in particular, has been extraordinary. From 2019 to 2021, its online sales have surged nearly 188.6%. Insider Intelligence estimates Target’s US ecommerce sales will grow 22.3% year-over-year (YoY) to $24 billion in 2022.

After a record-breaking year in 2020, Target’s overall sales continued to grow in 2021, delivering $106 billion in total revenue—a 14.7% increase YoY. All five core merchandise categories (apparel, food and beverage, household essentials, home furnishings, and hardlines) delivered YoY growth in the double digits.

Target retail ecommerce sales 2018-2022
In 2022, Target ecommerce sales will grow 22.3% YoY to $23.89 billion.

Click and collect bolsters Target’s sales growth 

Target is one of the seven major retailers (among Walmart, The Home Depot, Target, Best Buy, Lowe’s, Macy’s, and Nordstrom) accounting for 67.5% of all click-and-collect sales in the US. Target elevated the role of click and collect in their digital strategies in 2021, resulting in the largest increase in click and collect’s share of total ecommerce (going from 38.4% of Target’s digital sales to 43.3%). A major proponent of this growth is from the rising popularity of grocery click and collect, and Target is in a good position to continue riding the wave. 

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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, Roundel, 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. Target’s extended partnership with online consignment store thredUP, for example, comes amid strong sales on online fashion resale marketplaces.

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.