Target is Winning Big by Meeting Order-Ahead Demand Head-On

Need to Know

• The introduction of order-ahead, in-store pickup, Drive Up, and Shipt have contributed to 80% of Target’s digital sales growth.
• In total, Target’s digital sales have grown by 31%.
• In stores nationwide, “click and collect” sales have grown 47%. 
• Target has remodeled over 300 stores this year to allow for easier customer pickup.

Analysis

Target is heading into the holiday season with an impressive third quarter behind it. Thanks to an accelerated omnichannel strategy, the popular retailer has seen an increase in digital sales of 31%. 

The introduction of same-day fulfillment services such as in-store pickup, Drive Up, and Shipt has contributed to 80% of Target’s growth in third-quarter digital sales.  

Drive Up is Target’s highest-rated same-day curbside pickup service which grew 500%. The service allows consumers to shop online then pull up to a designated space at their local store to have their purchases delivered to their car by Target staff. In less than two years, Drive Up has now reached all 50 U.S. states and has become one of Target’s best-rated services, fulfilling nearly 5 million orders within the first half of 2019 alone. 

Target’s other new service, Shipt, has doubled in 2019’s third quarter. Shipt is a grocery delivery service that lets members order groceries and alcohol from their local store for delivery right to their door. Target acquired Shipt for $550 million in 2017 and now offers same-day delivery through the platform on grocery items and other things like household, pet, and baby items.

The slowest-growing of Target’s new services was Order Pickup, which still grew an impressive 50%. Much of that growth is due to the newly remodeled stores that allow for easy pickup. During the third quarter, Target remodeled 153 stores for a total of 300 year-to-date renovated locations. 

According to Target’s chief operating officer John Mulligan, “We aren’t just focused on enhancing our digital capabilities. As I’ve pointed out before, even in the fourth quarter, the vast majority of our sales still occur in our stores. And we continue to see outstanding results from the investments we’ve made in our stores over the last several years.”

Target isn’t the only major retailer to invest in pickup or “click and collect” services. Data shows that Home Depot customers picked up nearly half of their online orders during the holiday season last year. 

According to Adobe Analytics, in stores across the US, sales involving customers ordering goods online and then picking them up at a nearby store grew 47% in the 2018 holiday shopping season compared to the year prior. Among those stores are major chains such as Best Buy Inc., Walmart Inc., Home Depot Inc., and of course, Target Corp.

While enhancing any retailer’s online shopping capabilities is very effective, it’s clear that customers also want the ability to pick up their purchases or receive them on the same day the order was placed. By taking an omnichannel approach and providing a wide array of updated options for customers, traditional brick-and-mortar stores can experience massive growth.