Target Corp. will soon add fresh food and alcohol to the list of items available through its drive-up service.
It’s part of the retailer’s broader strategy to grow same-day delivery service. During the retailer’s year-end financial conference on Tuesday morning, Target execs repeatedly stressed the importance of same-day service. And with good reason: As Amazon continues to grow, brick-and-mortar retailers are seeking out ways to stay competitive.
John Mulligan, Target’s executive VP and chief operating officer, said the company has heard numerous calls to offer fresh food like milk and eggs through its drive-up service. “It’s the no. 1 request from guests,” he said.
The company will begin testing the new offerings at stores in the Twin Cities market in spring. Target doesn’t expect the change to affect the speed of drive-up services.
“One thing we will not trade on is speed and efficiency,” Mulligan said, noting that it’s a key differentiator for Target. With the drive-up service, customers typically get their products within about two to three minutes, he said.
Target reported a 90 percent uptick in sales related to same-day services in 2019. And in the fourth quarter, same-day services also made up more than 80 percent of Target’s comparable digital sales. Going forward, CEO Brian Cornell said the company will continue to “lean into same-day fulfillment options.”
The retailer’s strategy has generated guarded optimism among analysts and investors.
“We believe Target should continue to benefit from its transformation initiatives--price investments, private brands, remodels, small format stores, enhanced digital and delivery via Shipt, and fulfillment/supply chain enhancements,” such as drive-up services, Telsey Advisory Group analysts wrote in a research note.
Target’s 2019 full-year revenue grew 3.7 percent to $78.1 billion, while net earnings shot up 11.7 percent to $3.28 billion.
Unsurprisingly, the specter of coronavirus hung over the conference, which was originally slated to take place in New York City on Tuesday morning. On Monday, the retailer opted to turn the conference into a webcast over coronavirus fears.
There have now been more than 90,000 cases of the virus around the world, along with more than 3,000 deaths. Concerns still linger about Target’s supply chain in China. But, here in the U.S., Target execs have “certainly seen aggressive shopping across the country in our stores,” Cornell said, noting that customers have been stockpiling necessities and disinfectants.