Target steps up next-day parcel delivery as discounter tries to narrow gap with rivals

NEW YORK (AP) – Target is expanding its next-day delivery of parcel shipments to 35 of the nation’s top 60 metropolitan markets by the end of next month, marking 22 new cities this year, as the discount retailer aims to narrow the gap with the likes of Amazon.

That means that its next-day delivery expansion will go to 54% of the U.S. population, up from 20%, according to Gretchen McCarthy, Target’s chief supply chain and logistics officer. San Diego and Orlando and Tampa, Florida are on the list. Target plans to add another 20 more cities for next day delivery by next year, the company said.

Target said it offers same-day delivery to over 80% of the U.S. population, through Shipt, a delivery subscription service that Target acquired in 2017.

In comparison, online behemoth Amazon expanded the number of same day delivery sites by more than 60% in 2024 for its Amazon Prime members, and serves more than 140 metro areas.

Meanwhile, Walmart said it has delivered 7.1 billion units via same-day delivery or next-day delivery in the last 12 months, though it declined to offer the percentage. It also announced last month that it’s expanding next-day delivery across top U.S. cities including Los Angeles, Chicago, Houston and Atlanta for its third-party marketplace items to customers. Walmart said it reaches 95% of the U.S. population with next-day or two-day shipping.

McCarthy told The Associated Press that Target is using stores more precisely and leaning more into fulfillment centers when and where that can help with increasing speed without hurting profits.

“I think about us moving from this national fulfillment model to this market-based approach,” she said.

That entails Target continuing to use its 11 sortation centers, which batch orders packed from stores for delivery through its Shipt services or a by a third-party carrier. It’s also expanding its partnership with national carriers as well as its program with Shipt, where drivers pick up and deliver directly from stores to shoppers’ homes.

Revamping its approach to speedier deliveries comes at a critical time for Target, which operates more than 1,900 stores. The company has been struggling with a sales malaise, stemming in part from operational problems that have hurt the shopping experience at its stores. The company in August announced that Michael Fiddelke, a 20-year Target veteran and chief operating officer, will succeed CEO Brian Cornell on Feb. 1

In 2017, Target began transforming its physical stores as shipping hubs but, with the spike in online shopping since the pandemic, the in-person experience suffered as Target diverted store workers to fulfilling orders placed online, company officials acknowledged. But McCarthy noted Monday that stores should play different roles based on their sizes and locations.

Target said in August that it was testing a new shipping strategy in the Chicago market, where it operates nearly 80 stores, two fulfillment centers and two sortation centers. Within Chicago, it’s concentrated a higher percentage of local shipping demand into six stores, increased the volume processed by fulfillment stores and moved shipping out of 18 stores. McCarthy said it’s been able to increase its shipping speed while lowering the delivery cost per item than before the test.

Target is now launching elements of that strategy in 30 to 40 more markets, some of them will offer next day deliveries, McCarthy said.