Back to top

Target Launches New Delivery Service, But Is It Too Late?

Read MoreHide Full Article

Target Corporation (TGT - Free Report) launched Target Restock, a next-day delivery service in Minnesota on Tuesday after testing the concept with employees for a few months. Shares of TGT are up a slight 0.4% in late-morning trading on Wednesday.

Target Restock ships a box of household items to a Target REDcard holder for a flat rate of $4.99 per box. Customers also currently need to have an account with to access the service, although they can choose any payment method. Non-cardholders may be included in this offer in the future as the service expands nationwide.

This delivery services directly challenges’s (AMZN - Free Report) Prime Pantry, which also offers to ship a box of household items to customers for a flat rate of $5.99. Boxes can weigh up to 45 pounds, but they’re shipped using ground shipping. Target can offer next-day shipping because the boxes will come from nearby stores.

This launch comes almost two weeks after Amazon announced that the company would buy Whole Foods Market . While Target Restock effectively challenges Amazon’s Prime Pantry, Whole Foods stores could help Amazon redesign their own delivery system to be just as fast and cheap as Target’s.

This new service also follows Target’s latest earnings report where the company reported falling revenue and comparable sales. Target’s revenue fell 1.1%, to $16.02 billion, while its same-store sales at brick-and-mortar locations declined by 2.2%.

Target attributes these losses to a decline in customer visits and few items purchased on average per visit.

In addition to Target Restock, the company has other plans to revitalize its stores. The retailer plans to roll out 12 original brands over the next two years after the success of its Cat & Jack children’s line. Target will also open 30 small-format stores and remodel 100 of its larger locations by the end of 2017.

The company hopes that these changes will encourage shoppers to physically visit stores. While Target wants to continue to expand its online shopping sales, customers shopping in brick-and-mortar stores boost sales because shoppers are more likely to make impulse purchases.

Despite all these new initiatives, Target still faces strong competition from Amazon and Walmart (WMT - Free Report) as both companies continue to put forth new ideas and investments of their own. There is no better example than Amazon’s buyout of Whole Foods. Will Target’s changes be enough to increase profitability in the face of this?

That being said, Target remains a Zacks Rank #2 (Buy). With a VGM score of ‘A,’ Target remains one of the largest retail stores in the country that provides a brick-and-mortar experience unlike Amazon, while still possessing an upscale image vastly different from Walmart.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:, Inc. (AMZN) - free report >>

Walmart Inc. (WMT) - free report >>

Target Corporation (TGT) - free report >>

More from Zacks Stocks in the News

You May Like