Target hoping that new paid membership plan boosts sales
NEW YORK — Target, looking for ways to reverse a sales malaise, is getting into Amazon territory: the paid membership game.
The Minneapolis retailer said Tuesday that the new program, called Target Circle 360, will offer unlimited free same-day delivery in as little as an hour for orders over $35 and free two-day shipping. It will launch with a special offer for new members for $49 per year from April 7 through May 18. After that, it will cost $99 per year. But Target Circle credit card holders can sign up for the lower price anytime.
Target said its current Target Circle program has more than 100 million members who shop and spend more than five times more than non-members.
The launch of a new program was one of several moves announced at Target’s annual investors’ meeting that aim to rejuvenate sales and traffic.
The retailer also said it will refresh its stores and expand its successful storeowned brands. And over the next decade, the chain will build more than 300 new stores.
The meeting came as the latest financial results show Target’s shoppers remain cautious about spending on discretionary items as they’re squeezed by inflation and high borrowing and credit card costs.
The company reported its first annual decline in sales — 1.7% — in seven years.
“This is a unique moment to clarify our road map for growth,” Target’s CEO Brian Cornell told investors in Manhattan.
Target is more vulnerable than Walmart and other big-box stores. More than half of its annual sales come from discretionary items like toys, fashion and electronic gadgets, things that many Americans have pulled back on buying.
Even luxury shoppers have remained discerning.
Upscale department store Nordstrom announced fourth-quarter sales results Tuesday that were above analysts’ expectations, but it said its sales could decline in the current year.
But Target has also stumbled because of its own mistakes.
For several quarters, it had to right its inventory levels after being burdened with heavily stocked warehouses in summer 2022. The inventory glut forced it to discount heavily to clear out those goods.
Target has been trying to strike the right balance between offering value while also infusing its stores with trendy goods. Last month, the retailer launched a new collection called Dealworthy, which features nearly 400 everyday basics like socks and small gadgets starting at less than $1, with most items under $10.
Also, Target’s deal, struck last year, with designer Kendra Scott to offer exclusive collections of earrings and necklaces has resonated with shoppers. So has its new kitchenware brand under the Target label Figmint.
As for its loyalty programs, Target said it saw a need to make its free Target Circle program easier to use.
So members will see deals applied automatically at checkout so they don’t have to search for or add individual offers.