Target Corp. wants to move fast — and is spending $100 million to keep up the pace.
The money will go to the discounter’s supply chain sortation network, which plans to add more than six additional facilities by the end 2026, bringing the total to more than 15.
That builds on the retailer’s next-day delivery capabilities and will feed packages to Shipt — the quick-turn delivery service Target bought for $550 million in 2017.
“Through our sortation centers and Target last-mile delivery capabilities, we’re able to move faster and with more precision — while controlling costs and expanding our network capacity — for years to come,” said Gretchen McCarthy, Target’s chief global supply chain and logistics officer, in a company blog post.
Target piloted its first sortation center in its hometown of Minneapolis in 2020 and has continued to build the function.
Sortation teams visit 30 to 40 Target stores to pick up online orders, which are then delivered to third-party carriers or Target’s Shipt division, depending on cost. That leaves more room in stores for pick and pack operations that get the goods ready to be sent out.
The sortation centers delivered 26 million packages in 2022 and expects to nearly double that to 50 million this year.
Target described the investment as a move to become: “Bigger, faster, better than before.”
“These moves demonstrate the transformative power of our stores-as-hubs strategy, which leverages our store network as a launchpad for online orders,” the blog post said. “Sortation centers represent the next phase, ensuring faster delivery for guests, saving shipping costs and fueling our long-term growth.”
Target said up to 40 percent of its last-mile delivery orders with Shipt arrive in a day and that more orders would get next-day treatment as network expands.
The company also said that, in conjunction with its Shipt business, it has expanded options so drivers can take larger routes and use bigger delivery vehicles that can hold up to eight times more packages.
Clearly, retail has learned some lessons from the rise of Amazon, which spent heavily and over many years to build a mammoth distribution system that gave it quick access to every doorstep.
That, in turn, let Amazon set the pace, forcing retail to adjust to a world where two-day delivery became the norm — or at least something that customers knew existed and, increasingly, came to expect.
By buying Shipt and building on it, including with the new sortation centers, Target is increasingly setting its own pace.