Target to offer a delivery subscription
Circle 360 program will start at $49 a year and then rise to $99. One analyst calls the perks ‘very vanilla.’
Target Corp. will launch a paid subscription program next month that offers same-day delivery service, joining an increasingly large field of competitors betting that consumers will shell out annual fees in exchange for convenience.
The membership program, Target Circle 360, launches April 7 for an introductory price of $49 a year and touts deliveries in as little as one hour, company executives said in a presentation to investors Tuesday morning. After May 18, the price will increase to $99 annually for members who don’t have a Target credit or debit card.
The subscription game has gotten progressively more crowded in recent years.
Amazon’s Prime service, launched in 2005, has lured more than 200 million members, who pay $139 a year — or slightly higher if you pay month by month and less if you’re a student — for access to speedy shipping, as well as other benefits, including free returns and access to shows and movies on Amazon’s streaming service.
(The service recently announced a plan to include advertisements but will allow subscribers to opt out if they pay an additional $2.99 a month.)
Another of Target’s competitors, Walmart, charges $98 a year for a subscription plan it launched in 2020, which offers free shipping, as well as discounts at some gas stations and access to the Paramount+ streaming service.
Target’s new program is an outgrowth of its existing free loyalty program, Target Circle, which the company said has more than 100 million members.
Neil Saunders, a retail analyst at GlobalData Retail who has studied Target for several years, said that although he views the new subscription model as a starting point, he thinks the company will need to add perks beyond free, quick delivery to entice more consumers to sign up.
“The subscription model that Target is offering is very vanilla,” he said, noting that consumers are weary of adding yet another new charge to their annual budget.
“Households are still under financial pressure and a lot of people have a ton of subscriptions,” he said. “The general trend is people are trying to get rid of them, not add more.”
In his comments to investors Tuesday, the company’s chief executive, Brian Cornell, said the move didn’t mark a shift away from focusing on in-store shopping, noting that Target plans to open more than 300 new stores in the next decade.
“If you think store shopping will wind down anytime in the next decade,” he said, “we’ll politely disagree.”
Target on Tuesday reported that fourth-quarter earnings jumped 58% to $1.4 billion, beating Wall Street expectations. Overall sales rose 1.6%, but comparable-store sales, which include sales at stores open a year or more as well as online sales, fell 4.4% in the last three months of the year.