In a strategic move to streamline its service offerings and close the competitive gap with Amazon, Target has announced that San Diego will be the latest addition to its next-day delivery services.
This expansion is part of Target’s broader strategy to provide next-day delivery to 35 of the top 60 metropolitan markets in the United States by the end of October, with 22 new cities added this year alone.
Notable cities joining the ranks alongside San Diego include Orlando and Tampa in Florida.
Target has indicated that most items available on its platform will be eligible for next-day delivery. To take advantage of this service, San Diego residents need to place orders for eligible items by 3 p.m.
The service is free for orders exceeding $35, while customers who are Target Circle Card holders or Target Circle 360 members can enjoy the service with no minimum purchase requirement.
This expansion is significant, as it extends Target’s next-day delivery coverage to encompass 54% of the U.S. population, a substantial increase from the current 20%.
According to Gretchen McCarthy, Target’s chief supply chain and logistics officer, the company has plans to add 20 more cities to its next-day delivery list by the next year, demonstrating Target’s commitment to enhancing its logistics capabilities.
In addition to next-day delivery, Target claims to offer same-day delivery services to over 80% of the U.S. population via Shipt, a delivery subscription service that the company acquired in 2017.
When analyzed in comparison to its competitors, Target is facing significant pressure. Amazon, the leading online retailer, has expanded its same-day delivery services by over 60% in 2024 for its Prime members and now serves more than 140 metropolitan areas.
Walmart also plays a crucial role in the delivery landscape, publicly reporting the delivery of 7.1 billion units via same-day or next-day options over the past year, although it refrained from sharing specific percentage details. Walmart has declared a similar expansion of its next-day delivery offerings across major U.S. cities, which includes Los Angeles, Chicago, Houston, and Atlanta.
Walmart claims to have next-day or two-day shipping capabilities reaching 95% of the U.S. population, highlighting the stiff competition Target faces.
In light of these developments, McCarthy emphasized Target’s revised approach to logistics, shifting from a national fulfillment model to a more localized market-based approach.
This strategy involves optimizing the use of Target’s existing 11 sortation centers, which package orders for delivery through either Shipt services or third-party carriers. Furthermore, the company is also expanding its collaborations with national carriers.
The company’s focus on enhancing delivery speed comes at a pivotal moment as it deals with sales performance struggles attributed to operational missteps that have negatively affected the in-store shopping experience.
In August, Target revealed plans for a leadership transition as Michael Fiddelke, a 20-year company veteran, is set to succeed CEO Brian Cornell on February 1.
Target had initiated the transformation of its physical stores into shipping hubs back in 2017. However, amid the surge in online shopping due to the pandemic, the focus on fulfilling online orders has inadvertently detracted from shopper experiences in-store.
According to McCarthy, the role of physical stores should be redefined based on their size and location, underscoring the need for flexibility in Target’s operational strategy.
In August, Target began testing a new shipping approach in the Chicago market, where it operates almost 80 stores, supplemented by two fulfillment centers and two sortation centers.
This pilot concentrated local shipping demands into six stores, which led to an increased volume processed by fulfillment locations while reducing the shipping burden on 18 stores.
McCarthy reported that this testing phase successfully improved shipping speeds while decreasing delivery costs per item.
Building on these successful elements, Target plans to implement this modified strategy in an additional 30 to 40 markets, including those set for next-day delivery services.
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