Last week, Target reported a double-digit decline in electronics sales, a big factor in its quarterly sales slide. Then on Tuesday, Best Buy, the nation's largest electronics chain, reported a surprising sales bump.
The very disparate results raised a number of eyebrows -- including over at Target's headquarters.
Speaking at a local investors conference this morning, Target Chief Financial Officer Cathy Smith brought it up herself and gave props to Target's Minnesota neighbor.
"We're sitting here saying, 'Gosh, our electronics assortment is not where it needs to be. We're not seeing the innovation in the categories.'" she said. "And then Best Buy -- I'll give this one to them. They had a good quarter."
She noted in passing that the two chains have different assortments. (Best Buy, for example, has a big appliance business which has helped it weather the downward spiral in smartphones.)
"But it doesn't matter," she said. "We still have some work to do."
She said Target has been increasing its assortment in up-and-coming categories such as virtual reality and the Internet of things and will continue to do so.
Smith also hinted that Target is considering shrinking the physical space it dedicates to electronics in its stores since electronics sales are increasingly moving online. "So what is the right footprint in our stores?"
Smith was speaking at the InvestMNt conference sponsored by the CFA Society of Minnesota.
During her presentation, she ran through the several factors that Target executives told investors last week contributed to the 2.2 percent drop in traffic in the second quarter. Electronics was one of them.
The others were not enough emphasis in store displays and ads on its low-priced items or the "Pay Less" part of its brand promise, the disruption from transferring its pharmacies to the CVS banner and a reset of the products in its grocery aisles.
In April, Target added about 1,000 organic, natural and other better-for-you products to its grocery shelves. In the process, every item in that department was shifted, irritating some customers who had to search harder to find what they were looking for.
"People are creatures of habit and when you move their cheese, they get upset -- and reasonably so," she said.
