Target Corporations Capacity Planning

Introduction

Prior to the COVID-19 pandemic, most organizations were at their best times regarding performance and success rates. The operations of companies that used to take place before the COVID-19 period are now regarded as normal. The pandemic is known to have brought about several changes to daily operations and thus bringing shifts to such operations, and as a result, the period during and after COVID-19 emergence and evolution is regarded as the new normal. Being one of the largest retail stores in the United States, Target Corporation is also among the affected companies by the pandemic. Before the pandemic, people preferred to visit retail stores to make their purchases physically. However, after the pandemic, most small and multinational corporations had to integrate into the online world of conducting business.

Target Corporation has been forced to make some adjustments to the plans previously made to minimize the risks that may come with the pandemic. Target Corporation has continued performing well in matters of quality and performance, as seen by the increase in its sales and revenues. The fact that the corporation had already incorporated the aspect of online stores before has been the contributing factor to its success throughout the pandemic as individuals turned to online purchasing during the crisis. Based on the challenge brought about by the capacity planning, it would be important if Target Corporation kept aside funds for emergency and unexpected situations to avoid such problems and risks in the future. Therefore, this report aims to give an analysis and comparison of the quality, performance, and capacity planning of Target Corporation before and after the COVID-19 pandemic.

Target Corporation

Target Corporation is the eighth largest retail shop in the United States that deals with online and in-store sales of goods of all categories, including clothing, groceries, electronics, and furniture. Capacity planning is described as the process of finding out whether the capacity of production is needed for a corporation to meet the changing demands for its company. On the other hand, the quality and performance of a company are crucial in the daily operations of a company, considering that both customers and investors look at such factors to make their decision regarding purchasing and investing. Being a multinational corporation, Target has created a large target audience and customer base, expanding into several countries worldwide.

Consumers tend to look at the quality of a corporations products and service delivery to make their purchases, while investors tend to look at the performance of a company to decide on whether to make investments or not. Therefore, Target Corporation, before the pandemic, had a large customer base and several investors. Over the last ten years, Target has shown strong growth performance hence having a prolonged stock rally which has advanced over the past years. The companys sales and profits have been expanding since 2017 at a CAGR of 7.4% (Galanis, 2022). Target Corporation has been a choice and destination for dividend investors for many years.

Discussion

Capacity Planning

With the emergence and evolution of the COVID-19 pandemic, Target Corporation has been seen to experience strong traffic and also sales which are unusual compared to the previous years. During the first waves of the pandemic, people heavily relied on corporations such as Target to get their basic and essential items, including food, cleaning products, medicine, and pantry stock-up items. Therefore, this led to the company adjusting the timing expected of some of the strategic plans to support the team while mitigating any possible disturbances in work to satisfy the demands of American consumers.

According to the updated plans, which aim at remodeling the corporation, the company anticipated only 130 remodels, which was lower than the anticipated 300 remodels. The company had planned and announced to open of 36 new stores, but with the pandemic, the company expected to only open up between 15 and 20 new stores. The reduction was anticipated to allow the already underway projects to be completed while also moving the remaining projects through the next years. The company had plans to include fresh groceries and adult beverages in the Drive-Up and Order Pickup, but they momentarily had to adjourn the services due to the pandemic (Bulls eye, 2020). As the pandemic is still in existence, Target Corporation will continue to closely examine the situation in the coming months and recheck the strategic initiatives timing after returning operations to normal or rather more predictable behavior.

Quality and Performance

The quality and performance of Target Corporation were not affected as much compared to the capacity planning, as they had already incorporated the aspect of online shopping for their customers. Contrary to other companies negatively affected by the pandemic, Target Corporation had its first $100 billion mark in revenues for the fiscal year 2021 (Galanis, 2022). Despite the pressures in the retail store industry, the net margins in Target Corporation were showing an increase. While the market was seen to retreat during the COVID-19 period, Target was seen to stay strong, although they made several changes to stay ready for any risk.

Considering that the digital world was seen to dominate the business world after the emergence and evolution of the pandemic, companies that had already digitized their services were seen to make profits while those that had not digitized their operations faced losses, while some even shut down due to bankruptcy. The fact that there was a lockdown during the first wave of the pandemic meant that people were to stay in their houses, and therefore purchase of essentials was supposed to be done online. Having developed an online base before COVID-19 was quite helpful to Target as it enabled them to be successful regardless of the challenges and barriers brought about by the pandemic.

The retail industry is known for its thin profit margins and intense competition. Target, throughout this pandemic, has beaten its major rivals, including Walmart (WMT) and Best Buy (BBY), showing that their strategic plans and capacity planning were in line with their operations. However, Target Corporation fell behind Kohls and became the company with the second-largest gross margin across the known retail stores in the United States. Target has been seen to have traded at higher multiples in the last three years, and it is, therefore, the only retail store in the entire industry that has traded at a market capitalization that is higher than the total sales.

Conclusion and Recommendations

In conclusion, although Target Corporation has not been very much affected by the pandemic, they have made some adjustments to its strategic plans to ensure that they are ready in case of any changes. However, compared to other companies, the quality and performance of the company did not change as they had already incorporated the aspect of online stores where the customers can order goods online, and the company delivers. This has been quite productive to the company, such that it has been seen to be among the best-performing retail stores in the United States throughout the pandemic. Other companies should therefore follow the steps of Target to be successful in their operations during the pandemic and in case of other crises that may occur in the future. Therefore, Target Corporation is a high-quality business that continues to be a more attractive investment opportunity while the retail market is retreating and continuing to drive the stock prices even lower.

It is recommendable that the company invests more in digital and online stores as technology is considered the future. Technology has become the new normal such that most activities are being conducted online, including conducting business meetings, purchasing and paying for products, and learning. Target Corporation should also focus on investing in their employees as they are essential to Target Corporation and should ensure to put aside funds meant for unexpected situations and events such as the current pandemic to avoid the delays and inconveniences brought about by such events. Being a multinational corporation, Target should make sure that they incorporate online shopping and delivery in all their locations. Therefore, it is recommendable for retail stores and other companies to ensure that they have good management and leadership, as they are crucial in the growth and development of a firm.