Target taking dead aim at Amazon, Walmart with latest announcement | Bill McLoughlin

The Target logo is a bullseye, and right now it’s centered on key competitors Walmart and Amazon.

While Walmart has dominated headlines with its determined effort to match Amazon’s speed, convenience and price edge with consumers, Target’s recently announced investment of $5 billion to scale its operations this year, makes clear it has both of them in its sights.

With delivery times now being counted in hours, the fulfillment stakes have been raised dramatically. Physical stores, at one time seen as a disadvantage in the battle between bricks and clicks, are emerging as a critical advantage. The ability to position the right merchandise in proximity to the consumer who wants it, often the same day, is the focus on an intense race between these retail giants.

Whether it’s for same-day delivery or leveraging the store as a convenient customer pick-up location, Target — like a growing number of its big box competitors — is positioning its stores as a critical supply chain support of its rapidly growing online business. Since 2019, the retailer’s same-day fulfillment services have grown nearly 400%.

Enhancing that ability is clearly the focus of its 2023 spending. While announcing plans to add 30 new stores, an increase over the 23 added in 2022, its strategy to outfit, enhance and support those stores is as noteworthy as the number. For example, among its plans to improve store environments, Target noted that it will be “equipping the team with enhanced hold space and pickup areas for online fulfillment.”

The retailer also announced plans to expand its sortation center strategy, which organizes digital orders packed by local stores to speed neighborhood deliveries. Launched initially in its home city of Minneapolis, Target will expand that to 10 additional markets this year, with Dallas, Houston, Austin, Atlanta and Philadelphia planned to rollout by spring and another five to open later this year.

“Sortation centers enable a next-day shipping capability in dense markets and allow the company to further scale its stores-as-hubs strategy,” Target noted in its announcement.

“Stores-as-hubs” was part of the vision underpinning Amazon’s acquisition of Whole Foods in 2017, although in retrospect Target’s acquisition of same-day-delivery-platform-Shipt the same year could prove the more meaningful buy in the long run.

Target also announced plans to expand beyond the two new distribution facilities it built in 2021, with another four facilities currently in development and plans for several more in the next few years.

All of these moves are aimed at putting Target at the center of consumers’ day-to-day shopping plans in what has become a speed-to-market and speed-to-consumer race among the nation’s largest retailers.

This evolution, while not directly tied to furnishings, has clear implications for the furniture business when it comes to shaping consumer expectations. The so-called Amazon Effect raised the bar substantially for furniture retailers when it came to delivery speed. Traditional time frames crumbled in the face of the e-commerce giant’s free-and-fast delivery claims.

This latest round of upping the ante, which now puts Target at the center of the competition, is only going to raise the stakes for retailers of all sizes and shapes.

What are your sights set on?

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