Target, one of the largest retail giants in the United States, has announced its entry into the paid membership program arena with the launch of Target Circle 360. This move is aimed at competing with rivals Amazon and Walmart, who have already established successful membership programs. Target Circle 360 will offer a range of benefits to its subscribers, including unlimited free same-day delivery for orders over $35 and free two-day shipping. In addition, members will have access to exclusive partnerships and product offerings.
The same-day delivery service will be provided by Target’s delivery service, Shipt, which the company acquired in 2017. This acquisition has proven to be a strategic move for Target, as it allows them to offer fast and convenient delivery options to their customers. By leveraging Shipt’s capabilities, Target aims to enhance the overall shopping experience for its members.
Target Circle 360 is essentially an upgraded version of Target’s existing free loyalty program, Target Circle, which was introduced in 2019. The company has decided to relaunch the program to make it more personalized for its members. This includes automatic discounts and personalized deals tailored to individual preferences. Furthermore, Target is rebranding its RedCard credit and debit cards as Target Circle, offering customers an additional 5% off purchases.
In terms of pricing, Target is offering a promotional rate of $49 per year for the new subscription until May 18. After that, the annual cost will be $99. However, customers who already have a Target Circle credit card will continue to pay the promotional rate of $49 per year. This pricing strategy is aimed at attracting new members while rewarding existing loyal customers.
It is worth noting that Target is entering the paid membership space later than its competitors. This move comes as the company has experienced a decline in sales for three consecutive quarters. By adopting a strategy similar to that of Amazon and Walmart, Target hopes to generate additional revenue and boost its sales. Despite beating Wall Street’s expectations in its fourth-quarter earnings results, Target’s total comparable sales declined by 4.4%. The company also anticipates weaker sales in the first quarter of 2024, with a projected decrease of 3% to 5% in comparable sales. Target’s total revenue for the previous year was $31.9 billion.
In contrast, Amazon reported impressive results for the fourth quarter, with $170 billion in revenue compared to $149.2 billion in the same period the previous year. The company attributed this revenue jump to a “record-breaking” holiday shopping season and its highly successful October Prime Day event. Amazon’s membership program, which was launched in 2005 at a cost of $139 per year, now boasts over 200 million members.
Walmart, another major player in the retail industry, has also experienced success with its paid membership program, Walmart+. Launched in 2020 at a cost of $98 per year, Walmart+ has proven to be a hit among customers. Walmart CEO Doug McMillon revealed that Walmart+ members spend nearly twice as much as non-members and make more purchases throughout the year. This demonstrates the potential for Target Circle 360 to drive customer loyalty and increase sales.
In a letter to investors, Target CEO Brian Cornell expressed optimism about the future and outlined the company’s growth strategy. He emphasized the importance of investing in Target’s strengths and differentiators to achieve sustainable financial performance. Cornell also highlighted the introduction of the new Target Circle membership program as part of their roadmap for growth. By meeting consumers where they are and reigniting sales, traffic, and market share gains, Target aims to position itself for profitable growth in 2024 and beyond.
With the launch of Target Circle 360, Target is making a bold move to compete with industry giants Amazon and Walmart. By offering a range of benefits and personalized experiences to its members, Target aims to attract and retain loyal customers. As the retail landscape continues to evolve, it will be interesting to see how Target Circle 360 fares and whether it can help the company regain its sales momentum.
