Target’s key business metrics for inflationary times

Target, the retailer, is focusing on metrics including sales growth, market share and unit share as key metrics for its business as it navigates through inflationary times.

The background

In its last quarter, Target saw like-for-like sales rise by 2.6% on an annual basis, while traffic rose by 2.7%. The downside for the company was that quarterly profits declined by almost 90%, driven by price reductions on unwanted inventory. Such results hint at the challenges facing brands as they navigate a very fluid shopping environment.

The metrics

• Christina Hennington, Target’s chief growth officer, noted on an earnings call that “overall sales growth is one key indicator of the health of our business.”
• Market share, she continued, is “an equally important measure that we use to understand how we’re performing.”
  
• “And notably, during inflationary times like these, we heavily focused on unit share, specifically to better understand our relevance as compared to our competitive set, given that growth in both traffic and units is a strong proxy for the guests’ overall engagement with Target,” she added.
  

The reasoning

“Time and time again, these metrics have proven to be a better barometer for lasting success as compared to growth solely through average retail prices,” Hennington told investors.

Sourced from Seeking Alpha