Target (TGT) is betting big with its wallet that the U.S. consumer will come out in force this holiday season despite recent weakness in consumer spending and confidence.
The discount retailer said Wednesday it’s adding $50 million more in payroll this holiday season versus last year, mostly tied to having a great number of people on the sales floor helping shoppers during peak hours. Target is also doubling the amount of employees dedicated to order fulfillment, notably one-hour same-day delivery. This will be the first holiday season where Target’s same-day delivery service Shipt is live at all of its 1,500 stores.
The payroll increase is the "single biggest investment in holiday payroll ever in [the company’s] history,” said Target CEO Brian Cornell.
Target says it has also invested in employee training to better service shoppers. Overall the company plans to hire 130,000 seasonal employees.
Indeed Target enters the holiday season with some of the best sales momentum in retail as it has worked to remodel stores and expand its grocery departments. The stock price continues to hover around a record. So, the bold bet on the U.S. consumer choosing Target over rivals for the holidays makes sense.
But it does come amid several risks.
First, a calendar shift means there are only 26 days between Thanksgiving and Christmas this year compared to 32 days in 2018. That has many pros on Wall Street worried about excess discounting in retail and fewer sales.
Meanwhile, consumer spending and confidence have weakened since the summer amid worries about the U.S. trade war with China.