Target Joins the Retailer Raise Bandwagon, Promises $15 an Hour by 2020

Add Target to the list of retailers, including Walmart and TJ Maxx, that are responding to market realities by continuing to give their store employees a raise.

The company announced in a press release earlier this week that all of its store employees will earn a minimum wage of $11 an hour by next month; incremental wage increases over the next few years will lead to a $15-an-hour starting wage by the end of 2020.

Target’s CEO, Brian Cornell, claimed this move was to keep “investing” in its employees. But despite the struggles of brick-and-mortar retail chains, a tight labor market is one reason why big box stores really have little choice but to increase hourly wages to retain employees. After all, it is cheaper to keep employees than to hire and train new ones.

And no matter what the industry may be, better-paid employees tend to be happier and perform better on the job if they feel as if they are being treated fairly: Witness the wave of positive press Walmart received a year ago when lo and behold, the world’s largest retail discovered that employees given a raise contributed to both an improved customer experience and cleaner, more organized stores. In the big box world, however, Target and its competitors are far behind Costco, which has long been a retail sector leader with its high wages and relatively generous benefits.

Furthermore, customers want evidence that the brands they patronize are making a difference, whether in the community or for the planet. “At a moment when many consumers want to feel like they're handing over their money to a good corporate citizen, this might give the masses a feel-good vibe about shopping at Target,” summed up Bloomberg columnist Sarah Halzack in her assessment of Target’s labor and wages strategy.

Target can apparently afford to offer workers a pay raise, too, after recently rebounding from four consecutive quarters of declining year-over-year sales. Employees who have a spring in their step may also take better care of Target’s struggling food and beverage aisles. The Minnesota-based retail has been left behind chains such as Walmart when it comes to groceries, largely because its supply chain is far less sophisticated than that of its competitors. Target says it plans to increase its focus on its grocery aisles – but for the casual shopper, poorly-stocked shelves and bland grocery displays in general don’t compare to other sections such as housewares, clothing or personal care products.

Those wage increases come at the perfect time for Target as it gears up for the holiday season. The company announced it will hire as many as 100,000 seasonal workers for the Christmas rush. If these temporary employees can mesh with the 323,000 workers scattered across the 1,816 stores, customers may notice the difference – and continue to return regularly after the new year, which would help a sector that has long been battered by the growth of online shopping.

Image credit: Jay Reed/Flickr