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We review Target’s fourth quarter performance and how its focus on creating an omnichannel strategy, optimising its stores for ecommerce fulfillment, is underpinning sales growth and cost reduction.

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FedEx has launched an autonomous delivery service, the FedEx SameDay Bot. It is collaborating with a range of partners to help assess their autonomous delivery needs.

Tackling the complexities and costs of same-day delivery

Same-day, hyper-local delivery has come into focus in the US over the last 12 months as retailers aim to optimise their stores as a competitive advantage within the ecommerce channel. The FedEx SameDay Bot has been developed to help companies tackle the complexities and costs associated with same-day delivery.

Source: FedEx

Testing to start this summer

The FedEx Bot has been designed to travel on pavements and along roadsides. It incorporates multiple cameras and machine learning algorithms to avoid obstacles and help it navigate unpaved surfaces, curbs and steps. The company plans on testing it in Memphis, Tennessee, later this summer, complementing its existing ‘SameDay City’ service.

Innovating in the last mile

The growing popularity of same-day delivery services is leading retailers to find cost-optimal solutions, particularly for smaller baskets. Several retailers globally are testing similar delivery services. Earlier this year, Amazon launched the Amazon Scout in the Seattle area, while PepsiCo is collaborating with the University of the Pacific on a ‘SnackBot’ programme. In the UK, Tesco and Co-op are trialling similar initiatives, while in China, has deployed driverless delivery vehicles in several cities. We expect to see more innovation in this area, including further testing of driverless cars, as retailers also aim to better understand how customers interact with these various delivery modes.

Subscribers: log-in to access our latest report, Last mile: delivering the goods, to see 16 examples of how technology is being used to enhance the last mile.

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Target has launched an online marketplace, Target+, enabling it to significantly expand its online range.

Curated range complements existing offer

The launch of Target+ enables the retailer to offer products from third-party sellers. It will curate the range to align with the needs of its shoppers, enhancing its existing product offer. Initially, it will focus on key categories including home, toys, electronics and sporting goods. Target is also using search queries into its website to identify additional opportunities.

Source: Target

Invitation-only approach

The products will be integrated into its existing ecommerce platform, Target will partner with leading speciality and national brands to grow its ranges through Target+. Both Amazon and Walmart, Target’s key online competitors, operate third-party marketplaces. For Walmart, this has enabled it to expand its product catalogue to over 70m items, created dedicated brand experiences and add more premium ranges. One of the key points of difference for Target will be that it will select its partners, compared to Amazon and Walmart where sellers can apply to sell through their respective marketplaces. Last year, Albertsons launched a grocery marketplace for specialty food ranges.

Aiming to drive more profitable ecommerce sales

This programme will further underpin Target’s ecommerce growth objectives. Over the holiday period, its digital sales increased by almost 30%, remaining on-track for a 25% increase for the full year. In addition, Target will be hoping to improve the profitability of its ecommerce model with this launch. From a shopper’s perspective, Target is aiming to create a seamless experience between its own ranges and products from third-party sellers. Target REDcard holders will continue to save 5% on all purchases and have access to free-shipping. Customers will also be able to process returns through its stores.

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Following the launch of a pilot a program in Dallas-Fort Worth last year, Target is expanding the test of its new loyalty programme, Target Circle, to additional cities.

Launching the programme in six additional cities

Later this month, Target will launch the pilot programme in Charlotte, Denver, Indianapolis, Kansas City and Phoenix. Target Circle enables shoppers to receive 1% cash back on purchases, vote on community giving initiatives and receive personalised offers. This includes exclusive deals on the most relevant categories for each shopper and a birthday reward.

Source: Target 

Simplified approach to loyalty

Target has run a successful loyalty program, REDcard, for several years, providing customers with a 5% discount on most purchases. However, customers are required to link a debit or credit card to their REDcard to participate. This new programme brings a more simplified approach to loyalty while expanding the range of benefits. This aligns with its strategic goal of being ‘America’s easiest place to shop.’ Target Circle will be made available through the Target app.

The expansion of the pilot also sees an evolution of the name from Target Red to Target Circle, helping to distinguish between the two programmes. REDcard holders will still be able to claim the 5% discount but will be ineligible for the 1% cash back.

Opportunity to develop broader loyalty ecosystem

The expansion of this programme comes as Target continues to grow and develop its Shipt on-demand delivery model, a business it acquired in 2017. Operating as a membership-based model, Shipt continues to work with a range of retailers beyond Target. This year it will expand the range of categories it offers for delivery from Target stores beyond its food and consumables offer and add selected non-food items. Optimising this programme alongside Target Circle could enable the retailer to create a powerful loyalty-based ecosystem and rewards program which stretches beyond its core business.

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An essential summary of trading priorities, latest developments, and other key commercial insights for Target.
FedEx has launched an autonomous delivery service, the FedEx SameDay Bot. FedEx is collaborating with companies such as Lowe’s, Pizza Hut, Target, Walgreens and Walmart to help assess retailers’ autonomous delivery needs.
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