Target Introduces Target Circle 360 Membership Program to Compete with Amazon Prime and Walmart+

Target to Launch Target Circle 360 Membership Program

Target is set to launch Target Circle 360, a paid membership program that enhances its existing Target Circle loyalty program. This new program will provide members with unlimited free same-day delivery for orders $35 and above, as well as free two-day shipping. This move puts Target in direct competition with Walmart and Amazon, who also offer similar services.

Target is introducing three membership options - Target Circle, Target Circle Card (previously known as Target RedCard), and Target Circle 360. Target Circle membership will remain free. As part of a special promotion, the annual cost for Target Circle 360 will be $49 for non-cardholders who sign up by May 18. After this date, the cost will be $99 for non-cardholders and $49 for Target Circle cardholders.

In addition, Target recently announced its earnings for the fourth quarter. The revenue for Q4 increased by 1.7% year over year to almost $32 billion. However, comparable sales decreased by 4.4% in the same period. For the entire year, revenue dropped by 1.6% to $107.4 billion from $109.1 billion the previous year. Comparable sales for the year also fell by 3.7%. On a positive note, the full-year operating income saw a significant growth of 48% to $5.7 billion from $3.8 billion the previous year.

Article Insight:

Target recently introduced a new paid membership tier to enhance its loyalty program, following in the footsteps of other major retailers like Amazon and Walmart. This new program is priced similarly to Walmart+ at $98 per year, while Amazon Prime currently costs $139 annually.

All delivery services at Target are focused on providing convenience to customers. Recently, Target reported a significant increase of almost 14% in drive-up, in-store pickup, and their membership-based Shipt delivery service. According to analysts at TD Cowen led by Oliver Chen, the revamped and expanded Target Circle loyalty program, now with a membership-based tier, is expected to boost traffic, transactions, and customer engagement.

Target Circle was first introduced in 2019 and has already attracted over 100 million members, as stated by the company. The updated loyalty program aims to personalize the shopping experience for customers, according to Cara Sylvester, Target’s chief guest experience officer.

Target's focus remains on enhancing the overall shopper experience. According to Christina Hennington, Target's chief growth officer, the retailer excels at inspiring customers and helping them discover new products. This often leads to customers purchasing more than they originally planned. Hennington emphasized that this sets Target apart from competitors and is a strategy they will continue to develop, regardless of where or how the shopping journey begins.

Hennington noted that shopping is now more than just a transactional event. Consumers are constantly looking for inspiration from influencers and trendsetters. Target recognizes an opportunity to further this trend by utilizing their own platforms and external platforms like TikTok and Instagram.

CEO Brian Cornell mentioned during the call that Target's long-term strategy to grow its customer base includes expanding its appeal beyond current customers. One way they plan to achieve this is by investing in their store footprint, in addition to launching a new paid loyalty program.

Even though we are in the digital age, Cornell pointed out that a large portion of shopping in the U.S. still happens in physical stores. Target's stores have played a significant role in driving revenue growth, with over $30 billion in sales and a notable increase in digital sales. The company has been focusing on remodeling and forming partnerships for over 1,200 out of its nearly 2,000 locations.

Target CEO, Cornell, expressed confidence in the future of store shopping, stating that the company plans to open over 300 new stores in the next decade. Additionally, more supply chain facilities are in the works.

The company's Q1 outlook predicts a 3% to 5% decline in same-store sales, but the full-year guidance suggests comps may be flat to up 2%. Analysts from Jefferies noted that Target's Q1 and fiscal year guidance align closely with consensus estimates.

"We're feeling positive about the increase in traffic comps, the growth of its membership program, and the realistic guidance," they shared.

This story has been revised to include the yearly membership cost for customers.

Editor's P/S:

Target's launch of Target Circle 360 is a strategic move to enhance customer loyalty and compete with industry giants like Amazon and Walmart. The introduction of paid membership options aligns with the growing trend of subscription-based services, offering convenience and value to shoppers. Target's emphasis on personalization, enhanced delivery services, and the integration of digital platforms demonstrates its commitment to providing a seamless and engaging shopping experience.

The article highlights Target's focus on expanding its customer base and growing its physical store presence. The retailer recognizes the importance of physical stores in driving revenue and fostering customer connections. Despite the rise of e-commerce, Target's investment in store remodeling and partnerships underscores its belief in the enduring power of brick-and-mortar retail. The company's plans to open over 300 new stores in the next decade and expand its supply chain facilities indicate its long-term commitment to meeting the evolving needs of consumers.