A Target logo is displayed on the screen of a smartphone.
- The big-box retailer said Wednesday that it is testing an extension facility that helps it get online orders to more shoppers the day after they click "buy."
- The discounter may open similar hubs in other major U.S. cities.
- The company's e-commerce sales have declined, especially as shoppers buy fewer discretionary items.
Target has a new way to speed packages to customers who live in the farther-out suburbs and neighborhoods of major cities, as it tries to give its e-commerce business a jolt.
The big-box retailer said Wednesday that it is testing an extension facility that helps it get online orders to more shoppers the day after they click "buy." It opened the first one last month in Smyrna, Georgia, about 16 miles northwest of Atlanta, and may open them in other cities.
Drivers from Target-owned delivery service Shipt pick up packages from the extension facility and deliver them to customers' doorsteps. The drivers are independent contractors, similar to those who deliver for Uber.
The extension facility is part of Target's effort to offer next-day delivery to more customers. Early this year, it said it would spend $100 million over the next three years to build a larger network of supply chain hubs to support the effort.
More than 96% of the company's online orders are fulfilled at stores. The retailer has opened supply chain facilities, dubbed "sortation centers," that then help group those boxes into denser and more efficient delivery routes. It has opened nine facilities and plans to have at least 15 by the end of January 2026.
The extension facility adds to that model and expands the radius for faster deliveries.
Money Report
Target did not disclose the price of the extension center, but a spokesperson said it is not part of the planned $100 million in supply chain investments. Target said the extension facility will bring next-day delivery within reach of 500,000 more customers near Atlanta. It now can provide next-day delivery to a total of three million people in the Atlanta area.
Target's push to deliver online orders faster and more profitably comes as its e-commerce sales shrink and shoppers pull back on discretionary purchases. In the most recent quarter, which ended April 29, Target's digital sales declined 3.4% year over year, mirroring the downward trend seen by Costco, Best Buy, Kohl's and others. One of its rivals, Walmart, bucked the trend as online sales jumped 27% year over year in the U.S. in the fiscal first quarter.
Feeling out of the loop? We'll catch you up on the Chicago news you need to know. Sign up for the weekly> Chicago Catch-Up newsletter.
Plus, in recent weeks, several analysts have downgraded Target's stock, saying its sales may have peaked during the Covid-19 pandemic. They cited a tougher backdrop for selling apparel and other items that aren't food or necessities. Those challenges added to blowback Target has faced for including and then later removing some LGBTQ+ merchandise from its Pride Collection.
Shares of the company have fallen about 11% this year, underperforming the 14% gains of the S&P 500. Its stock closed at $132.72 Tuesday, down nearly 30% from its 52-week high.
On a call with reporters in May, Target CEO Brian Cornell said customers are still shopping online. Yet, he added, many items shipped directly to customers' homes are discretionary merchandise — and those sales have slowed.
