Target Leans Into Same-Day Delivery in Paid Membership Launch

Following the playbook of Amazon and Walmart, Target launched its first paid membership program that combines its RedCard credit card and Shipt membership programs under the Target Circle umbrella.

The program, foretold by a Bloomberg article earlier this year, particularly focuses on Target’s investments in same-day delivery, which includes its Shipt acquisition, build-out of curbside pickup, and efforts to fulfill over 95% of online orders from stores.

“Here’s the takeaway,” said CEO Brian Cornell Tuesday on Target’s fourth-quarter earnings call. “Without huge investments in stores, supply chain, and tech, there is no drive-up or order pickup, which were monumental growth drivers during COVID and today. And without stores, supply chain, and tech and providers like UPS, FedEx, and Shipt, there is no home delivery, which is ready for a step change in guest acquisition, satisfaction, and loyalty. As we move forward, we’ll leverage our 2017 acquisition of [Shipt] to help us build unmistakable recognition for Target same-day delivery.”

The launch of the paid membership program, called Target Circle 360, is part of a broader revamp of its loyalty program.

The free Target Circle program, which launched in 2019 and has grown to more than 100 million members, will become easier to use and more personalized. Previously, shoppers searched the app for Circle deals and then added them to their app. Now, deals are automatically applied at checkout through the app. The deals include those provided by partners like Ulta and Apple.

According to Target, Circle members spend five times more than non-members and shop five times more often.

Target’s RedCard is also getting rebranded to the Target Circle Card with the same benefits. Cardholders get 5% off every Target purchase, free two-day shipping on thousands of items, and an extra 30 days to make returns.

The paid Target Circle 360 program’s big perk is unlimited free same-day deliveries through Shipt on orders of more than $35. Members also gain access to the Shipt Marketplace, which offers same-day delivery from more than 100 retailers. Available at a promotional rate of $49 a year through May 18, the annual rate for Target Circle 360 is $99 a year. Target Circle Card members will continue to pay the $49 rate.

Membership programs from Amazon ($139 per year), Costco (Gold Star, $60 a year; Executive, $120 a year), and Walmart ($98 a year) have proven to be effective traffic drivers. While many competing membership programs have more perks, ranging from streaming services to gas discounts, Target Circle 360 has the best offer around same-store delivery.

Target’s comparable sales, down 4.4% in the fourth quarter, declined for the third quarter in a row, but a bright spot has been same-day services (in-store pickup, drive-up, and Shipt), which represented more than 10% of total sales and expanded 13.6% in the quarter, led by curbside pickup.

In an interview with CNBC, Cornell said the Target Circle 360 program is positioned to capitalize on the increased appeal of same-day delivery. He said, “There’s a guest who’s looking for the ease and convenience of having something brought right to their home — in some cases, within an hour — and we just want to elevate the awareness that we can do that.”