Target taking dead aim at Amazon, Walmart with latest announcement | Bill McLoughlin
The Target logo is a hit and it’s currently focused on key competitors Walmart and Amazon.
While Walmart has dominated headlines with its determined effort to match Amazon’s speed, convenience, and price advantage with consumers, Target’s recently announced $5 billion investment to scale its operations this year is a testament to that that it has both in its sights.
With delivery times now counted in hours, the stakes for fulfillment have increased dramatically. Physical deals, once viewed as a disadvantage in the battle between bricks and clicks, are evolving into a key advantage. The ability to get the right merchandise close to the consumer who wants it, often on the same day, is at the heart of an intense race between these retail giants.
Whether for same-day delivery or using the store as a convenient pickup location for customers, Target is positioning its stores — like a growing number of its big-box competitors — as a key supply chain support for its fast-growing online business. Since 2019, the retailer’s same-day fulfillment services have grown nearly 400%.
Improving this capability is clearly the focus of spending for 2023. While plans are announced to add 30 new stores, an increase from the 23 added in 2022, his strategy is to equip, enhance and support these stores, as remarkable as the number. For example, among its plans to improve the store environment, Target noted that it “will provide the team with expanded storage areas and pickup areas for online fulfillment.”
The retailer also announced plans to expand its sorting center strategy, which organizes digital orders packaged by local stores to speed up neighborhood deliveries. Originally launched in its hometown of Minneapolis, Target will expand to 10 additional markets this year, with Dallas, Houston, Austin, Atlanta and Philadelphia planned by spring, with five more opening later this year.
“Sorting centers enable next-day dispatch capability in dense markets and enable the company to further scale its stores-as-hubs strategy,” Target noted in its announcement.
Stores-as-hubs were part of the vision behind Amazon’s acquisition of Whole Foods in 2017, although in retrospect, Target’s acquisition of the same-day delivery platform ship may make more sense in the long run .
Target also announced plans to expand beyond the two new distribution facilities it built in 2021, with four more facilities currently under development and several more planned over the next few years.
All of these moves aim to put Target at the heart of consumers’ daily shopping plans, in what has become a race for speed to market and consumer among the country’s largest retailers.
While not directly related to home furnishings, this development has clear implications for the furniture industry when it comes to shaping consumer expectations. The so-called Amazon effect has significantly raised the bar for furniture retailers in terms of delivery speed. Traditional timeframes crumbled in the face of the e-commerce giant’s claims of free and fast delivery.
This latest round of increases, which Target now takes center stage in the competition, will only raise the stakes for retailers of all sizes and shapes.
What have you planned?