Target (TGT), a big box retailer, thrived during the pandemic with sales increasing 19.8% and comparable store sales up 19.3% versus the previous year. The contribution to comparable sales from digitally originated sales was 12.1% in 2020, up from 1.9% the previous year. The accelerated pivot to digital, though out of necessity, may have prompted Target to omit the following language included in the prior year’s annual report:

“In addition, a significant portion of our total sales is derived from stores located in five states: California, Texas, Florida, Minnesota and Illinois, resulting in further dependence on local economic conditions in these states.”

Target’s ecommerce success is undeniable; online sales spiked 145% in 2020. Ecommerce accounted for approximately 18% of 2020 sales, up from 9% the prior year. Beneath the surface though, Target’s ecommerce ambitions and results appear more muted. The month before the company filed its latest 10-K, Target announced it was shedding ecommerce assets:

“In February 2021, we sold Dermstore LLC (Dermstore) for approximately $350 million, subject to working capital and other closing adjustments. We expect to recognize a pre-tax gain in excess of $300 million in the first quarter of 2021. Dermstore represented less than 1 percent of our consolidated revenues, operating income and net assets.”

Separately, Target’s investment in Casper, an ecommerce bed-in-a-box brand, has been a disaster for investors. Target recorded a loss of $19 million in 2020 and $41 million the year before. In its latest annual report, Target disclosed it had sold its investment in Casper in 2020 after investing a reported $80 million three years ago. In all, Target lost at least 80% of its investment— approximately $60 million— in Casper.

Despite its digital failures and divestitures, Target is now one of the top ten ecommerce brands in the U.S. However, much of what Target counts as ecommerce is actually omnichannel commerce and is highly dependent on its physical stores:

Buy online pick up in store (BOPIS)
Order online, pick up curbside

Target does offer pure play ecommerce— standard and same day delivery— but its physical stores are ground zero for almost all online activity. In fact, 95% of all sales were fulfilled out of Target’s physical stores:

“We expanded our digital fulfillment capabilities, including fresh and frozen Food & Beverage products added to Order Pickup and Drive Up. During 2020, over 50 percent of our comparable digital sales growth was driven by same-day fulfillment options: Order Pickup, Drive Up, and delivery via Shipt.”

Target is also doubling down on its in-store experience. Remember, Target sold its ecommerce cosmetics and beauty brand Dermstore yet the latest annual report disclosed Target had entered into an in-store partnership with another cosmetics and beauty brand:

“We announced a partnership with Ulta Beauty under which we will operate Ulta Beauty at Target, a shop-in-shop experience debuting on Target.com and in more than 100 Target locations beginning in 2021, with plans to scale to hundreds more over time.”