Target's wage hike symbolizes commitment to employees, customer experience

Target bullseye sign
Target looks to attract committed employees by raising the minimum wage to $11 an hour.

Target has announced a hike in its hourly minimum wage to $11 and a commitment to $15 an hour by the end of 2020.

Starting in October, all team members will earn at least $11 an hour as Target continues to recruit and retain strong employees. The raise will also apply to temporary staff hired for the holiday season.

“Target has a long history of investing in our team members. We care about and value the more than 323,000 individuals who come together every day with an absolute commitment to serving our guest,” said Brian Cornell, CEO and chairman of Target. “Target has always offered market competitive wages to our team members. With this latest commitment, we’ll be providing even more meaningful pay, as well as the tools, training and support our team needs to build their skills, develop professionally and offer the service and expertise that set Target apart.”

On average, Target employs 160 staff per store and offers career development opportunities. One in four store managers per store, on average, started in the company's hourly positions.

More than 60% of Target team members live within five miles of the store they work, as the company continues to invest in a healthy atmosphere for employees.

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So will this wage hike be a strategy to help set Target apart from the competition?

"The question will be whether Target can translate the hourly increase to their advantage," Greg Portell, lead partner in the retail practice of A.T. Kearney, a global strategy and management consulting firm, told FierceRetail. "We know that 'experience' is increasingly becoming a differentiator for retailers. By increasing pay, Target should be able to attract higher quality candidates as well as stabilize traditional retail turnover. An expected result would be a better in store experience than competitors who don’t make a similar investment in people."

Target's last major wage increase was from $10 to $11 in 2016. The current rate is higher than the minimum wage in 48 states. In addition, Target offers a variety of schedules to meet a diverse population of needs and the company does not believe in on-call or snap scheduling.

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Benefits for employees include a 10% discount at all Target stores and 20% health and wellness discounts on fresh produce, all Simply Balanced products and C9 merchandise. Other unique benefits include mental health and legal counseling and financial resources for tuition reimbursement.

And just before holidays seems an optimal time for Target to have made the announcement. Not only is it emphasizing Target's commitment to bettering the store experience, it also show's the company's ability to put their commitment to people into play just prior to a high-value time period, says Portell.

"In the end, better customer service should bring higher share of wallet," he added.

Moving into the future, commitments like these will be necessary for brick-and-mortar retailers in order to compete with the convenience of online.

"Traditional brick and mortar retailers need to take advantage of the high-touch service environment created by a storefront. Target’s willingness to consistently attract the best talent in each part of their business should pay off, if they are able to keep all the key players on the retail team chasing the same goals," Portell said.