Photo: RetailWire
Is Target ready to make a move on the home delivery front?
Target announced yesterday that it reached a deal to acquire Grand Junction, a San Francisco-based technology company that has created a software platform used by retailers and others to manage local deliveries through a network of more than 700 carriers coast-to-coast.
The two companies have been working together on a same-day delivery pilot at Target’s store in the Tribeca neighborhood of New York City. Guests (Target’s parlance for customers) who purchase items while shopping in the store can choose to have them delivered to their apartment rather than carrying them home on foot or on the bus, cab or subway.
“Grand Junction’s technology and algorithms will help Target deliver to guests faster and more efficiently,” said Arthur Valdez, executive vice president, chief supply chain and logistics officer, Target, in a statement. “This acquisition is part of Target’s ongoing efforts to strengthen Target’s supply chain to provide greater speed, reliability and convenience for guests.”
Target’s deal for Grand Junction comes at a time when it is playing catch up to rivals including Amazon.com and Walmart when it comes to home delivery and click and collect services. Mr. Valdez, the Minneapolis Star Tribune reports, has been tasked with accelerating the retailer’s logistics capabilities since he joined Target last year after 16 years with Amazon.
In June, the retailer launched a pilot of Target Restock, a next-day delivery program of everyday staples for REDcard members that has been compared to Amazon’s Prime Pantry. Shoppers have a choice of more than 10,000 products including baby, beauty, household products, personal care, pet and shelf-stable foods. Orders are added to a box that holds up to 45 pounds with shoppers updated on how much room is available as they add items to their cart. Items ordered by 2:00 p.m. are delivered the next day for a fee of $4.99.
Target also offers same-day deliveries of groceries in concert with Instacart in Chicago, San Francisco and the Twin Cities market.
Grand Junction’s 13 employees will continue to work out of the company’s office in San Francisco once the deal is completed.
- Target to Acquire Grand Junction to Expand and Improve Delivery Services for Guests – Target Corp.
- Target acquires delivery technology firm, beefs up grocery team – Minneapolis Star Tribune
- Grand Junction
- Will Target’s answer to Prime Pantry help it outdo Amazon? – RetailWire
- Former Amazon executive Arthur Valdez working to transform Target from elephant to gazelle – Minneapolis Star Tribune
Discussion Questions
DISCUSSION QUESTIONS: Will Target’s acquisition of Grand Junction enable it to compete more effectively in the home delivery market? What do you see as the logistics opportunities and challenges that Arthur Valdez and the newly-expanded Target team have in front of them?
Poll
BrainTrust
Chris Petersen, PhD.
President, Integrated Marketing Solutions
Cynthia Holcomb
Founder | CEO, Female Brain Ai & Prefeye - Preference Science Technologies Inc.
Grand Junction represents a new service feature that’s part of Target’s ever expanding and evolving home delivery offering. As noted, Target continues to play catch-up on the home delivery front, and while the Grand Junction addition will certainly help, it does not represent step-change. The big opportunity Valdez has that he didn’t have at Amazon is more than 1,800 potential physical stores that can be leveraged for distribution; the challenge he has is that he’s competing against Amazon and Walmart.
Even if you are on the right track, you still get run over if you’re not moving fast enough. Pilots are great, but survival requires the ability to scale rapidly.
Grand Junction and Target Restock are definitely moves in the right direction to meet the rising expectations of today’s consumers. In playing catch up, it will be interesting to see how Target manages the mosaic of logistics in order to reliably fulfill the last mile at the consumer’s door. Beyond the delivery trucks, it is no simple matter to manage the inventory required across all of the partners and distribution points.
It took Target 11 years to take home delivery and click and collect seriously after other retailers proved the success. It took Walmart 12 years to add free two-day delivery after Amazon implemented it and proved the model. Target still has not implemented that program.
I ask one question: What is the Target strategy? To wait a decade and follow along? Because I don’t see anything new in this strategy or anything else Target is doing.
Followers never succeed over the long term. They need to find something that is important to their guests that they can do and their competitors cannot. Otherwise, it is a black hole.
Target is behind the curve when it comes to innovation and I’m glad to see they’ve finally stepped up to home delivery. Better late than never. Target has historically been very good at understanding the wants and needs of their guests and serving them accordingly. Technology is a new piece of that puzzle it seems they’re still sorting out. Target needs to accelerate their innovation cycle to get to what works for their guests faster as retail continues to evolve.
I see this as a wise investment for Target. There is a greater push today than ever before for instant gratification, and fast home delivery is one of the services many customers want. The purchase of Grand Junction will get Target in the game of fast home delivery and make them competitive with customers who want this service. Eventually, Target can expand the service and find other benefits to include, such as at-home picking up of returns and delivering exchanges.
The trend is clear: the larger players — whether pure-play e-commerce or pure-play stores — are acquiring best-of-breed businesses to help them transcend from one channel to many. Provided that the cultures match, this approach to getting to the goal line quicker is a win/win. The acquisition should help Target significantly.
This reminds me of one of the opening scenes in Saturday Night Fever where John Travolta is delivering paint that a customer ordered. It seems simple yet Target needs to hook up with a small tech company to accomplish the same thing. Does this have to be so complicated? Perhaps hiring two employees and buying a small delivery truck will accomplish the same thing without any algorithms or executives with lots of words in their title.
Target’s acquisition of Grand Junction should certainly help them improve logistics for home delivery. Amazon and Walmart have been raising the bar on fast and economical delivery of goods and other retailers are playing catch-up. While it appears challenging to catch up to Amazon, the advantage that Target and Walmart have is their network of stores in close proximity to customers that can serve as distribution centers.
If Target can optimize the efficiency of the last mile of the supply chain and drive down the costs, they are in a much better position to compete effectively with same-day delivery. One challenge that all retailers will have is to retrain their in-store staff on new processes for pick, pull and ship. This is not a traditional process for retail employees.
Agreed. What would in-store staff stop doing in order to retrain and fulfill these new processes, or would they look to hire additional people?
This will provide Target with a proprietary crowdsourced delivery platform, which not only will bolster their last-mile efforts, but could also be used to improve existing ad hoc deliveries (e.g. transfers and other out of cycle shipments to store).
Target knows who the competition is. Some of that competition is Walmart and Amazon — and every other online retailer that will deliver their merchandise directly to your doorstep. If Target wants to compete at this game, this is a good acquisition. This may be something that is a “must do,” not a “nice to do.” This may be what Target has to do to not be disrupted. However, this all started a long time ago. Target must move swiftly without mistakes.
This is the right move for Target, the only issue is that it’s a little late. Target has been consistently behind the curve in terms of eCommerce strategies, and delivery services. They do have a convincing distribution network with so many locations available. I think they’ll need to scale rather quickly, but if the service offers a convincing customer experience, there’s no telling how quickly it can take off.
This is a smart move by Target but it remains to be seen how well they can and will compete with AMZN and others. Now Boxed is getting into same-day delivery (a 3 hours window) as well. So while there is competition, Target still has a solid customer base and this will bring it closer to being viable versus AMZN, though closer is relative given how far ahead Amazon is now. Retailers need to understand the new drivers of customer engagement and loyalty and this underscores the value of TIME as a powerful loyalty currency.
There is no doubt that demand for home delivery is increasing. Growth in urban markets, where many consumers do not have cars and do not want to carry heavy groceries and other products, is in double digits and will remain so for some years.
On this basis, it makes sense for Target to become more serious about delivery; the acquisition of Grand Junction will no doubt help improve competencies and operational effectiveness. That said, with increasing price pressures — especially in grocery and household products — margins are already under pressure, and increasing the penetration of home delivery is only likely to worsen the erosion.
Like most things Target does this move is a long way behind the curve and appears to be piecemeal rather than part of an overarching strategy. The blunt truth is that Target still hasn’t figured out what it wants to do in grocery, how to make its smaller stores work efficiently, or how to scale up performance in non-food.
Admittedly, the group seems to be making some smart appointments and will soon reveal its new store format. So, hopefully, this will become part of a shift to a much more ambitious, customer centric, and entrepreneurial Target rather than just a “grasping at straws” type action.
Home delivery, is the area where I suspect all businesses lose money. So does “compete effectively” mean they’ll lose more than others? If so, then, yes, I think they’ll make it.
Any legitimate move into the home delivery market is a positive response towards the needs of 21st century retailing. In this instance we must add the inclination to bungle new ventures by the Target executive management team. Refusing to address the need to fix what is broken has been stubbornly upheld for over a decade. There is the possibility of winning one with this investment, but many will attribute a win to the inevitability of chance instead of cleverness.
Target’s acquisition of Grand Junction is a step in the right direction to enable Target to compete in the home delivery market. Being able to provide consumers with the options for fast home delivery may increase sales, especially in busy cities such as New York and San Francisco. Furthermore, Target can leverage their many store locations to increase the speed of delivery.
Everyday staples, commodity items easily obtained anywhere are not as time sensitive as a special wine for a dinner party and the dinner party dress to be worn by the hostess. If the wine and dress are not delivered on time? Deal Breaker. Shoppers will hurry back to the guys who sell the same wine and the same dress, delivering it day in and day out on time, at scale.