Target Corp. is set to enter the subscription service arena with the launch of its paid membership program, Target Circle 360, next month. The program will offer same-day delivery services, positioning itself against competitors in the increasingly crowded subscription market.
Launching on April 7 at an introductory price of $49 per year, Target Circle 360 promises deliveries in as little as one hour. However, after May 18, the annual membership fee will increase to $99 for members without a Target credit or debit card.
Target’s move follows the success of Amazon’s Prime service, which boasts over 200 million members paying $139 annually for perks such as fast shipping and access to streaming content. Walmart also offers a subscription plan priced at $98 per year, featuring free shipping and additional benefits.
Target aims to leverage its existing free loyalty program, Target Circle, which already boasts over 100 million members, as a foundation for its new paid subscription offering. This strategic move reflects the company’s commitment to providing added convenience and value to its customer base amidst growing competition in the retail landscape.
Neil Saunders, a retail analyst at GlobalData Retail, believes that while Target’s new subscription model is a step in the right direction, the company may need to offer additional perks beyond quick delivery to attract more subscribers.
Saunders described Target’s subscription offering as “very vanilla,” suggesting that consumers may be hesitant to add another annual charge to their budget, especially amidst ongoing financial pressures and an abundance of existing subscription services.
He noted a general trend among consumers to reduce the number of subscriptions they have rather than adding more to their plate.
In response to these concerns, Target CEO Brian Cornell emphasized that the introduction of the subscription program does not signify a departure from the company’s focus on in-store shopping. He highlighted Target’s plans to open over 300 new stores in the next decade as evidence of its continued commitment to physical retail.
Target’s CEO, Brian Cornell, expressed confidence in the future of in-store shopping during the company’s recent earnings call. He stated, “If you think store shopping will wind down anytime in the next decade, we’ll politely disagree.”
Despite challenges such as declining comparable sales in the fourth quarter, Target reported strong earnings that surpassed Wall Street’s expectations. The company’s fourth-quarter earnings surged by 58% to $1.4 billion. While overall sales increased by 1.6%, comparable sales, which include both in-store and online sales, experienced a decline of 4.4% in the last three months of the year.
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