It's been an interesting past couple of years in the retail space.
The early 2020s have been marked by fierce competition and consolidation. Covid ushered in an onslaught of online orders, which forced some of the largest retailers in the U.S. to get crafty with their fulfillment, inventory and delivery plans.
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Suddenly, brick-and-mortar shops became far less important as customers sheltered in place to avoid public spaces. But after restrictions were lifted and the pandemic seemed to be a bygone era, customers' shopping habits remained shifted.
To this day, four years after the height of the stay-at-home movement, most of us prefer to shop online or spend far less time shopping in person than we might have in the 2010s. Like it or not, we are now living in a new era of retail, where online fulfillment is king and few only-brick-and-mortar stores have the tools to thrive.
Amazon (AMZN) was, of course, the earliest to this equation. Prime members have now come to expect that if they place orders for several items on a Monday, they'll get them by Tuesday or Wednesday — and sometimes sooner. Billions of dollars have been poured into Amazon's near-immediate shipping efforts, and it's a large part of the reason it has remained the world's largest online marketplace for years.
But Walmart (WMT) also realized the opportunity and quickly began nipping at Amazon's heels. As the world's largest retailer, it wasn't the heaviest lift to get a robust shipping and fulfillment program off the ground.
Walmart has more than 4,600 stores in the U.S. alone, and with at least one location within 10 miles of 90% of the population, many Walmart stores now double as fulfillment warehouses to get orders to customers quickly.
Target aims to compete with Walmart, Target
Amazon and Walmart have built out long runways for opportunity and growth over the past several years, and each now offers hundreds of millions of SKUs available for near-immediate (and free) shipping to members at any given moment.
That's tough competition to go up against, but it's precisely what Target aims to do with its launch of Target Circle 360, a paid membership program offering fast and free shipping, among other benefits.
On Tuesday, during its Q4 earnings call, Target announced the launch of Target Circle 360. It also noted that revenue strongly beat Wall Street estimates.
So on the heels of a successful holiday shopping season, now may be the perfect time to launch a long-anticipated membership program.
Target Circle 360, launching April 7, will include a number of benefits:
- Unlimited free same-day delivery for select orders over $35
- As little as one-hour delivery on select items
- Free two-day shipping
- Access to Shipt's "preferred shoppers" program
The service will cost $49 a year during its initial promotional period, which ends May 18. Eventually, the cost of Target Circle 360 will rise to $99 a year.
Target will rely heavily on its more than 2,000 stores to act as fulfillment hubs, similar to Walmart's model. It will also utilize its Shipt subsidiary, which offers quick delivery for common essentials like grocery and household staples. Target paid $550 million for Shipt in 2017, so the Target Circle 360 program may have been in the works for quite a while.
Whether Target will offer other perks in addition to its quick and easy fulfillment options is unclear. The annual $99 membership fee compares with Amazon Prime, which costs $139 a year, and Walmart+, which costs $98 a year.
Here is what an Amazon Prime membership gets you:
- Free shipping and returns, often two-day or next-day on eligible items
- Access to Prime Video streaming
- Savings at Whole Foods Market
- Access to the Amazon Prime Rewards Visa Signature Card
- Access to Amazon Fresh grocery stores
- Try Before You Buy shopping
- Amazon Photos storage
And here is what a Walmart+ membership gets you:
- Free store delivery
- Free shipping and returns on eligible items
- Fuel savings at Exxon, Mobil, Walmart and Murphy gas stations
- Included Paramount+ streaming subscription
- Limited auto maintenance at Walmart Auto Care Centers
- Cash back on select travel expenses
- Members-only prices during select promotions, like Black Friday
- Mobile shopping in-store
Target is planning other big changes
Target is also rebranding and relaunching several services with which customers may already be familiar. It plans to rebrand its Target Red Card as the Circle credit card.
The new Target Circle card will offer customers the following perks:
- 5% off purchases
- Free two-day shipping on select purchases
- Extended return timelines
Target will also refresh its free-to-join Target Circle customer program, which launched in 2019 to positive reception.
Management promises that members will more easily be able to log points and keep track of their benefits. This after some customers had complained of difficulty tracking those benefits.
Instead of having to scan the app for savings each time they make a purchase in stores, savings and discounts now will automatically be applied. Customers will still have to check out as a Target Circle member and link their account in order to access these discounts, though.
Target says the process for using its free Target Circle rewards will now be easier for everyone and more customized to each member's shopping preferences.
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