Target's Expanding Next-Day Delivery Capabilities, Bringing Speedier Delivery to Even More Guests
Target | February 22, 2023
Target’s sortation centers take online orders that their team members prepare in the backrooms of our stores and sort them for quick, local delivery. And now their scaling up the ability to deliver packages next day — in a big way.
Target's plan to invest $100 million to expand their flexible, best-in-class supply chain sortation network to more than 15 facilities by the end of 2026, bringing their next-day delivery capabilities to guests across major U.S. markets. Sortation centers and their Last Mile Delivery capabilities support Target guest experience and benefit the business — helping deliver more efficiently and faster, at a lower cost while increasing their capacity.
Target currently has nine sortation centers in Minnesota, Texas, Colorado, Illinois, Georgia and Pennsylvania, including their three most recent facilities in the greater Chicago and Denver metro areas. With this $100 million investment, Target's planning to build more than a half dozen additional facilities. As they grow their network, they anticipate creating hundreds of new jobs in local metro areas with market-leading wages.
And with each new sortation center, Target's local store team members can focus on what they do best: delivering an excellent shopping experience that brings joy to their guests.
Bigger, faster, better than before: These moves demonstrate the transformative power of their stores-as-hubs strategy, which leverages the store network as a launchpad for online orders. Sortation centers represent the next phase, ensuring faster delivery for guests, saving shipping costs and fueling long-term growth.
Count the benefits
Target piloted its first sortation center in Minneapolis in 2020, sorting online orders efficiently and quickly for delivery to local neighborhoods by a third-party carrier or Shipt delivery route, depending on the lowest-cost carrier option. Doire Perot, operations director for our Minneapolis sortation center, has seen firsthand how her team, the facility and its operations have evolved over that time.
Getting up to speed
Sortation centers benefit guests and team members across the board.
For guests, it means getting your online purchase that much faster, making Target the easiest place to shop. The sortation centers delivered 26 million packages to guests in 2022. Up to 40% of Target Last Mile Delivery orders with Shipt arrived at guests’ doorsteps the next day, and they expect to deliver more orders next day as they expand the network.
In partnership with Shipt, they’ve expanded options for drivers to take advantage of larger routes where they can use larger-capacity vehicles that can hold up to eight times more packages per route. They are testing these third-party partnership delivery vans in two of the sortation center markets and plan to roll them out to all markets in the next few years.
And for store team members, sortation centers not only simplify fulfillment of online orders, but also make the operations stronger. Each sortation center team visits 30 to 40 local stores to pick up packages for delivery. With sortation logistics dedicated off site at the sortation centers, stores have more room for picking and packing items for guest orders, says Richard Dean, store director for our store in Edina, Minnesota, which is supported by our Minneapolis sortation center.
It also boosts his team’s ability to pick and pack larger numbers of packages every year to serve guests. Ultimately, the sortation centers and Target Last Mile delivery capabilities help get guests the products they want, when they want them — unlocking yet another occasion to shop at the Bullseye.
Forward-looking statements: Statements on this page regarding Target’s future performance and investments, expectations regarding its supply chain network, and expectations regarding its fulfillment capabilities are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties which could cause Target’s actions to differ materially. The most important risks and uncertainties are described in Item 1A of Target’s Form 10-K for the fiscal year ended January 29, 2022. Forward-looking statements speak only as of the date they are made, and Target does not undertake any obligation to update any forward-looking statement.