Will next day delivery make Target an omnichannel force?
Target announced yesterday that it has begun testing a new next-day delivery program involving around 8,000 everyday products such as coffee, granola bars and laundry detergent.
The pilot program, known as Target Restock, is currently limited to selected team members working in the retailer’s headquarters. The chain plans to expand the test with a “dedicated online experience” open to REDcard holders in the Minneapolis area this summer. REDcard holders, just as they do in stores, will receive a five percent discount on the items they buy.
Customers visiting the Target Restock site will be able to order a box filled with multiple items, similar to what Amazon.com does with its Prime Pantry program. Orders placed by 1:30 p.m. will be fulfilled for delivery the next day. Categories not included in the program include fresh, refrigerated or frozen foods. Target has not announced what it plans to charge for the service, but it is likely to be competitively priced to Amazon’s deliveries, which come with a $5.99 fee. Each box will hold up to 45 pounds of merchandise.
“We want to provide more options to shop Target, and we believe many guests will appreciate the ease of shopping all their favorite essentials online and the convenience of next-day delivery,” an unnamed company spokesperson told TechCrunch. “Target can provide industry-leading service and value with Target Restock thanks to our assortment and using stores to deliver orders faster than our rivals.”
Whether Target will be able to provide a greater assortment and deliver products faster to its customers than, say, Amazon or Walmart, both of which offer same-day delivery in some markets, is debatable. The chain also faces competition from retailers such as Costco, Whole Foods and others that are working with third-party services to deliver online orders.
Earlier this year, Target announced it would invest $7 billion over the next three years to remodel stores and lower prices. The announcement followed a fourth quarter in which same-store sales declined 1.5 percent despite traffic ticking up 0.2 percent. The retailer’s online sales, which jumped 34 percent, were not enough to offset lower rings in its physical locations.
At the time, Target CEO Brian Cornell said the results were an indication that sales are shifting from stores to online. Mr. Cornell said that, although Target had made progress, it needed to speed up its response to rapidly changing market conditions. It would appear as though Target Restock is one such response.
- Target Plans to Test a Next-Day Essentials Delivery Service in the Minneapolis Area – Target
- Target begins testing next-day delivery with ‘Target Restock’ service – TechCrunch
- Will Target’s $7 billion investment pay off in market share gains? – RetailWire
DISCUSSION QUESTIONS: Do you take Target’s test of its Restock next-day delivery program as a sign that the chain is looking to speed up its response to market conditions? Do you see other areas where Target is lagging behind its competition that require attention?