Right on 'Target'

Target has remained competitive with ecommerce giants by investing in new digital initiatives to drive online sales.

As consumers increasingly take their shopping online, brick-and-mortar retailers have had to make serious adjustments to remain competitive: cutting in-store costs, strengthening their digital presences, and even shuttering store locations. Yet even with these measures, major ecommerce retailers like Amazon continue to encroach on their territory. With Amazon's recent purchase of Whole Foods, for example, consumers will soon be able to buy quality groceries online at a significantly lower cost, threatening smaller grocery chains and local stores that simply can’t compete with Amazon’s promise of convenience, speedy delivery, and extensive stock.

So where do traditional big box stores fit into this already crowded ecommerce landscape? Target is one major retailer that has successfully diversified its offerings and moved into the digital realm with its innovative approach.

Essentials On Demand

It’s not uncommon for Target shoppers to find themselves wandering the aisles and placing items “you didn’t even know you needed” in their baskets. Because its in-store shopping experience is so distinctive, Target wanted to create a similarly unique online shopping experience while offering real value to its customers.

Following Amazon’s lead, Target is appealing to customers online through its new Target Restock service, which is currently available to over 70 million customers in twelve major cities, including New York, Chicago, Los Angeles, and San Francisco. Similar to Amazon Pantry, Restock lets customers choose from over 15,000 everyday products such as baby items, groceries, and pet food. Customers can fill a box with up to 45 pounds of stuff, order by 2pm between Monday and Friday, and receive their order the very next day. The shipping fee is just $4.99, slightly lower than the $5.99 charged per box by Amazon Pantry.

Target can offer such speedy delivery service by using its stores as distribution centers, eliminating the need to ship from remote warehouses. While Target’s next-day service can’t quite match Amazon’s Prime Now option, which offers same-day delivery in two hours or less, Restock has helped Target remain competitive even as the world's largest ecommerce retailer expands into its territory.

The Smaller, the Better

Target has also remained competitive by thoughtfully redesigning select existing locations to make for a more intimate in-store experience. Unlike the average Target, which covers about 145,000 square feet, these new outlets occupy around 50,000 square feet. Usually located in urban areas, they offer a smaller selection of items tailored to the needs and tastes of local consumers. In addition to being much more cost-effective, these smaller stores allow Target to retain a strong foothold among brick-and-mortar competitors even as it expands its online presence.

By streamlining its supply chain, Target is providing an example for struggling big box retailers to follow as ecommerce continues to transform retail.