Target's CEO says a 'seismic shift' in retail is forcing the company to spend billions of dollars

Target is making some major changes in an effort to compete with what CEO Brian Cornell on Tuesday called a "new era of retailing."

"Our industry is in the midst of a seismic shift," Cornell said in a call with investors.

In an effort to compete with e-commerce rivals, Target announced plans to remodel more than 600 location by 2019.

The effort will cost more than $3 billion, with executives reporting each location remodeling will cost roughly $5 to $5.5 million and a Super Target remodeling costing slightly less than $10 to $11 million. Reimagined locations with have fresher, more modern designs, as well as bridging the gap between digital and in-store shopping by serving as distribution centers for online orders.

The retailer will also open more than 100 smaller-format stores in the next three years in cities and on college campuses, including roughly 30 in 2017.

"We've honed in on two points we have to fix," COO John Mulligan said. "To put it bluntly, we are slow and we have too much inventory."

Target also provided a number of other solutions on Tuesday, when the company announced comparable sales drop of 1.5%, missing analysts' estimate of 1.3%.

The company announced it would invest more than $7 billion in the next three years to better position the company to compete in the "new era" of a retail industry that is increasingly tied to e-commerce.

Target plans to make a significant investment in cutting prices across inventory, as opposed to promotions on specific items. The company announced plans to launch more than 12 new brands in the next two years, which the retailer says will represent more than $10 billion in sales.

While Target has doubled digital sales in the last three years, the retailer has struggled to compete with e-commerce competitors like Amazon when it comes to pricing and convenience. With the $7 billion investment, Target executives said that the company is playing the "long-game" to grow sales and increase market share.

"Given our results, where we are today simply isn't good enough," Mulligan said.

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