Target Corporation (NYSE: TGT) is now more than half way through its launch of same-day delivery with Shipt, a delivery service it acquired a few months ago for $550 million, as well with the curbside pickup delivery service known as “Drive-Up”. On its already prosperous track, Target plans to have these services provided to the majority of their stores before the holiday season starts.
As of this week, more than 600 Target stores in 20 states provides Drive Up, while nearly 1,000 locations are set to offer the service by holiday season, according to the company. By the end of this month, Target said it will be offering same-day delivery via Shipt in more than 135 markets and by next year is said that “all major product categories” will be available as well, with some items being unavailable for same day delivery. Shipt uses personal shoppers to stay in communication with a customer as they pick up items in the store. The personal shoppers text a recipient if an item is out of stock and alert them en route to delivery, this is similar to Walmarts Jetblack, a text delivery service.
Chicago’s stores are said to be the first city in the U.S. to have all four of the company's new delivery and pick-up options that includes Shipt, Drive Up, Target Restock and the attainment of online orders from within stores. Target Restock is a delivery option that allows customers to order everyday essentials, like household and pet products, in an up to around 45 pound box. The excitement from the news are to be attracting more customers to Target and alluring them to buy more, said the company.
Chicago is “an important and strong market for target, with 80-plus stores, including a host of small-format stores,” a company spokesman told CNBC about Targets investments in the area. “It has a dense, urban population to support ‘from-store’ delivery,” he voiced, “It’s also a highly competitive market.”
Target customers must pay $99 annually for Shipt, while Amazon Prime (AMZN) is $119 yearly for orders to come with free two-day shipping, while Walmart (WMT) tries to meets its grocery delivery service plans that include a rate of $9.95 flat-rate shipping that goes with an order of at least $30 to qualify for delivery, to 100 metro areas by the end of 2018.
Unlike Walmart, who has been buying out more companies in international investments, Target has focused more on remodeling its stores, reinforcing its supply chain and launching new brands internationally.
“With Drive Up, we’re seeing it as popular among parents of small children for ‘fill-in trips’ to pick up items like diapers,” a company spokesman said. He also said that those shoppers choosing to have their online orders completed at and shipped from a local Target stores have been increasing their basket size by six times on average.
The number of shoppers heading to Target rose 3.7 percent, making its strongest performance in more than a decade. “The expectation is for the benefits [from the shipping and pickup options] to accelerate into next year as each of the programs mature and are rolled out more broadly,” Gordon Haskett analyst Chuck Grom said in recent notes to clients, “Target has accelerated its efforts over the past 12 months to leverage its vast store base [1,800+ locations] while providing customers with an array of convenient options to shop,” Grom wrote. “In fact, management believed that by the year end, Targets array of shopping options will put them on par, if not make them more convenient than amazon.