US retailer Target Corp is investing US$4bn annually over the next several years to scale its capabilities, including accelerating the pace of new store openings, enhancing fulfillment services and strengthening its supply chain.
Building on years of sales growth and a record 2020 financial performance, Target says the investments will scale key capabilities across its retail platform in order to “drive deeper engagement with new and loyal guests”, and to boost market share gains, and long-term, profitable growth.
Following 30 store openings in 2020, Target plans to accelerate the pace and open 30-40 new stores each year.
In urban centers such as New York City, Los Angeles and Portland, Target will open more small-format stores, while in dense suburban areas surrounding cities such as Denver or Brooklyn, the retailer has identified sites for new mid-size stores to serve new guests that fill retail gaps.
Target also expects to accelerate its store remodel programme this year and complete approximately 150 in time for the holiday season, with plans to remodel more than 200 stores a year beginning in 2022.
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To add capacity to Target’s fulfillment operation and further scale its stores-as-hubs model, the company is testing a new type of facility in Minneapolis called a ‘sortation centre’ and expects to open five more in 2021.
With this new last-mile capability, the sortation centre collects online orders from local stores multiple times a day and sorts them into efficient routes for carrier delivery. This pulls the sorting activity out of store backrooms so it can be consolidated more efficiently at one facility, giving store teams more time and space to fulfill additional orders, while reducing the load on external carriers. This process increases store fulfillment capacity, reduces last-mile fulfillment costs and speeds delivery to guests.
The company is also making investments in its supply chain replenishment capacity to support stores’ continued growth well into the future. This year, Target expects to open two distribution centres, one in Delaware and one in Chicago. Two more are planned in 2022 to support the east and west coastal areas.