Dive Brief:
- Target is expanding its next-day delivery capabilities to 20 new U.S. metro areas this spring as the retailer plans to ramp up its supply chain spending, per an announcement Tuesday.
- The company plans to launch next-day delivery soon in markets in California, Florida, Ohio, Tennessee, Texas and other states, building upon previous launches in 2025, per a Target fact sheet. The service is free for orders over $35, orders from Target Circle 360 members or purchases made using Target’s Circle Card. Otherwise, next-day delivery costs $5.99.
- "Most items eligible for shipping at Target are eligible for next-day delivery," Target said in the fact sheet. "That includes hundreds of thousands of items — 85% of what we sell in Target stores."
Target expands next-day delivery coverage
Dive Insight:
A key driver in Target's growing delivery capabilities is how it leverages its widespread roster of stores. Seventy-five percent of the U.S. population is within 10 miles of a Target location, and the company expects to extend its reach further over time, Jim Lee, EVP and CFO, said in a financial community meeting Tuesday.
"For us, stores are a digital hub," Lee said. "So we are leveraging stores to drive that, empower digital fulfillment. So we feel great about where we sit because we have 2,000 stores that are well located and then have access to most of the population."
The company's fulfillment approach isn't uniform across stores, however. Target has been scaling back the fulfillment duties of some stores while concentrating volume in locations better equipped to handle online orders, an undertaking first piloted in Chicago. Expanding the Chicago test is "one of the big unlocks for us to do next-day fulfillment," Lee said.
Next-day services are only one piece of Target's delivery offerings. Same-day services generated more than $14 billion for Target last year, accounting for two-thirds of its overall digital sales, Lee said. The remainder of digital sales was mostly tied to volume in markets where next-day fulfillment is available.
The next-day expansion comes as Target plans to increase its capital expenditures by more than $1 billion in 2026, reaching a total of about $5 billion. Spending in support of supply chain and technology will increase as part of the plan, but the bulk of investment will remain focused on Target's stores, Lee said.
Target isn't the only major retailer planning for increased supply chain spending. Walmart's capital investments in its supply chain will likely peak over the next two years, a trend driven in part by automation, President and CEO John Furner said last month.
