Even if it represents a big box department store by definition, Target also has long enjoyed its unique and trendy image, as well as a cult-like following, particularly among young women. Furthermore, suburban moms, young professionals, and college students alike seem to enjoy flocking to stores, picking up a snack, and then wandering the aisles, searching for inspiration. This phenomenon has spawned a litany of social media posts, memes, and in-group jokes by Target lovers who take to the internet, to share their mutual delight. As the joke commonly goes, “You don’t go to Target because you need something. You go to Target to be told what you need.”

And now Target is ready to tell a whole new group of consumers what they need, through Target Circle 360, a paid subscription membership service, which offers competitive perks, including unlimited, free same-day delivery for orders totaling more than $35. This plan also will give members access to two-day free shipping and to Shipt Marketplace. In this way, the retailer clearly is seeking to compete more directly with Walmart and Amazon, which already provide similar services.

Going a step farther, Target has announced plans to develop its own proprietary AI technology, to achieve a range of benefits, focused on both customers and operations. Currently, in-house teams are working to predict trends in consumer demand and enhance inventory management systems, in initiatives that are informed by AI. Another dedicated AI-enabled marketing effort will pursue more targeted marketing strategies, including personalized product recommendations that will appear on the website.

Meanwhile, the retailer is streamlining its supply chain, through the creation of dedicated sorting centers, to speed up order fulfillment. The sorting centers will dispatch orders to Target’s existing and expansive network of stores, which will function as fulfillment hubs too. By expanding its long-standing partnership with Shipt, Target also hopes to develop more efficient last-mile delivery services, which ultimately might include drone deliveries.

With these changes, Target establishes itself as the latest retailer to join the high-tech and AI-forward race. But its approach also is unique, reflecting headquarters’ intentions to expand its physical retail channels while also chasing the latest technological advancements. By focusing on growth in both sectors simultaneously, the chain believes it can grow exponentially—and perhaps close the gap between its standing and the market positions of its larger competitors.

Arguably, its approach outlines a new blueprint for traditional retailers to follow, if they hope to expand into the tech space. As Target begins this structural shift, its success or failure will help determine the landscape for similar retailers.

Discussion Questions

1. Do the benefits of a Target Circle 360 membership seem worth an annual fee? Why or why not?
2. What is one pain point for retailers that will be eliminated with Target’s new supply chain model?

Sources: Brian Sozzi, “Target CFO Talks Target Circle 360, New Paid Membership Program,” Yahoo Finance, March 5, 2024; Dan Berthiaume, “Is Target Becoming Retail’s Newest Tech Giant?” Chain Store Age, March 8, 2024; Lauren Forristal, “Target to Launch Its Own Version of Amazon Prime, Starting at $49/Year,” TechCrunch, March 5, 2024; OpenAI ChatGPT, “Assistance with Research on Target’s Marketing Strategies and Retail Innovations,” ChatGPT, April 7, 2024