Target Aggressively Expanding Delivery Services Ahead of Holidays

Target continues to fire on all cylinders in terms of fulfillment, delivery and omnichannel, expanding its delivery from store and curbside pickup programs ahead of the holidays and seeing strong growth in its Shipt same-day delivery service.

John Mulligan, EVP and COO of Target, said the company started the year offering its Drive Up curbside program at 50 stores, blowing up to 800 locations by the end of Q2 with plans for 1,000 by the holiday season and continued expansion in 2019.

“Our stores have done an excellent job training their teams to deliver this new service and guest satisfaction is off the charts,” Mulligan told analysts on the Q2 earnings call. “Our most recent Net Promoter Score for Drive Up is 88, a crazy high number, the highest of any service we provide.”

Mulligan said Target is continuing to experience rapid growth and adoption of its other digital fulfillment services, including restock, in-store pickup and home delivery.

He said personal shopper and same-day delivery service Shipt is now operating in more than 160 markets serving over 1,100 Target stores. Over the last year, he said, Shipt’s membership base has more than tripled while orders, revenue and gross merchandise value (GMV) are two to three times higher.

“While some of this growth is being driven by Shipt’s entry into new markets, we’re seeing (GMV gains) in comparable markets, meaning markets in which Shipt was already operating a year ago, that are up nearly 100% year-over-year,” Mulligan said.

Shipt has added 19 new retail partners to its marketplace in 2018, operating under 24 banners. Mulligan said it was twice as many as Shipt added in all of 2017.

“In urban markets like New York or Chicago, San Francisco, Boston or Washington D.C., the ability to shop our urban small formats and then hours later have someone deliver that package to your doorstep for a $7 charge is being very well received,” said Target CEO Brian Cornell. “You’re going to continue to see us scale up Drive Up and Shipt and same-day delivery in urban markets. So that’s going to play a very meaningful role.”

Target’s July sales event, which coincided not accidentally with Amazon Prime Day, far exceeded expectations, nearly tripling the forecast and logging the biggest digital sales outside the holidays, Mulligan said. While this was great news the unplanned demand presented major logistical and challenges which supply chain and store teams were able to handle.

“While that challenge presented some long days for our team, I am really proud of how they responded adding to my confidence in our ability to accommodate peak demand in the upcoming holiday season,” he said.