Over the last few years, Amazon (AMZN) and Walmart (WMT) have been the leaders in the delivery sector, offering multiple options for consumers to receive their packages more efficiently and faster than all others.
Both retail giants have leveraged their delivery memberships and services to boost growth and become lucrative companies, especially in matters of same-day and next-day delivery, with Amazon’s Prime subscription and Walmart’s Walmart+ membership.
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Although Target is also considered a retail giant, the company has yet to reach the same level as its strong rivals. It has fallen behind over the last few quarters, reporting multiple declines and slowdowns in its business.
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To compete with its rivals, Target announced in 2023 that it would invest $100 million to expand its next-day delivery capabilities to make faster deliveries across more locations and build upon its Stores-as-Hubs strategy. This growth-focused strategy aims to enhance customers’ in-store experience and leverage stores as fulfillment hubs at reduced costs.
However, only a year later, Target’s annual revenue fell for the first time last year since 2016. This hard blow caused the company to plot a new strategy to take down its competition.
Target delivery boxes
Target tests new delivery method to increase speed
Target (TGT) revealed it has been testing different ways to leverage its Shipt capabilities to enable faster store-to-guest deliveries in areas without a sortation center nearby.
It is doing so by enabling drivers to strategically pick up orders directly from Target’s physical stores and deliver them directly to customers.
Shipt is a Target-owned delivery service platform that currently powers the retailer’s same-day delivery. This membership-based service allows customers to order groceries and other essentials and have them delivered by local Shipt drivers so they can receive their items on the same day the order was placed.
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Over the last year, Target saw an increase of over 30% in packages delivered by Shipt drivers from sortation centers, which boosted the number of packages delivered at a lower cost.
No specific participant locations have been disclosed. However, despite this test being in its infancy stage, the strategy seems to work since early results are already positive.
“While we’re in the early stages of expanding this test to more markets, we’re very encouraged by the early results as it’s making us faster and more cost-efficient,” said Target CEO Michael Fiddleke.
Target’s focus on speed delivers positive results
Target’s speed-focused efforts build on its stores-as-hubs strategy, where local stores are used to fulfill customers’ orders. The goal is to increase shipping speed and efficiency, which will subsequently cause a rise in sales.
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In 2024, Target doubled the number of next-day delivery packages and reduced the average delivery time by over 11% compared to the year prior.
For the fourth quarter of Target’s fiscal 2024, comparable sales grew by 1.5% compared to the year prior, with digital comparable sales up nearly 9%.
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