Target invests in “stores as hubs” strategy to navigate e-commerce surge
Retailer expands drive-up services from basic online order pick-up, adding fresh and frozen grocery pickup, drive-up returns, and Starbucks coffee order pickups
As retailers worldwide face a swift shift from brick and mortar shopping to online commerce, many of them are shrinking the footprint of their physical stores. But Minneapolis-based Target Corp. is running in the other direction, investing billions in a “stores as hubs” strategy that encourages shoppers—known as “guests” at the company—to visits its stores and engage personally with its brands and its employees, according to a keynote speaker at the CSCMP Edge conference in Orlando.
One example of that strategy is the store’s drive-up offering, which has evolved in stages since launching in 2013 as a basic “order pick-up in store” service, Gretchen McCarthy, Target’s chief supply chain and logistics officer, said in a session called “Building a Guest-Centered Global Supply Chain.” Since then, it has added features like: nationwide drive-up pickup, fresh and frozen grocery pickup, and now, drive-up returns and Starbucks coffee order pickups.
The company has also launched a $100 million plan to expand the number of its sortation centers to 15 sites by the end of 2026. Each of those sites picks up packages daily from a range of 30-40 local stores in its region. Once at the sortation centers, the packages are delivered to customers either by nationwide parcel carrier or by arranging it through “hyper-local delivery” via its Shipt division, the last-mile delivery provider it acquired in 2017. Since 75% of Americans live within 10 miles of a Target store and the sortation centers act as local hubs, delivering e-commerce orders via Shipt service enables steep gains in KPIs like safety, lead time, and productivity, McCarthy said.
As the company looks toward a future of greater visibility and inventory control, it has a stated goal of gaining greater flexibility to handle supply chain disruptions of the future. “We all need to be really, really aware and maybe even a little bit paranoid about what’s around the corner, so we can be responsive and agile for our customers,” said McCarthy.
