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Delivery Race Heats Up: Target (TGT) Ups the Ante

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Target Corporation (TGT - Free Report) is fast catching up with the likes of Amamzon.com, Inc. (AMZN - Free Report) and Walmart, Inc. (WMT - Free Report) to stay in the delivery race. The retail giant is more than halfway through its rollout of same-day delivery with Shipt and the launch of curbside pickup service Drive Up. Target is on track to meet its goal of making available these services in majority of the stores it operates by the holiday season.

The retail war is heating up with an increasing number of players shifting focus toward minimum delivery time. Almost all retail giants are pumping in more money and are either acquiring or partnering with delivery service companies for same-day delivery to stay ahead in the race.

Target Intensifies Delivery Race

Target has set a goal of making available the Shift service in majority of its stores in more than 40 states before Christmas 2018. And the company is more than halfway through its rollout of same-day delivery with Shipt and the launch of curbside pickup service Drive Up. 

According to Target, Chicago will become the first major urban area to get access to all four of Target’s coveted fast-delivery services — Shift, Drive Up, Target Restock and from-the-store delivery. Drive Up will be available in 1,000 stores by the end of the year. Moreover, Target also decided last month to cut its next-day delivery fee by nearly half.

In December 2017, Target announced plans of acquiring grocery delivery service Shipt for $550 billion and using its technology platform to expand same-day delivery at Target Stores. In March, Target and Shipt started same-day delivery of more than 55,000 groceries and home goods, toys, electronics and other products in Baltimore and Washington. It seems that the company is well on track to meet its goal and is fast expanding Shipt same-day delivery service and curbside pickup service Drive Up.

Retailers Shift Focus 

Amazon set the ball rolling by playing to its strength — a strong delivery wing — when it started offering free-two-hour delivery service from Whole Food stores to its Prime members in February. The move came within a year of the e-commerce giant’s $13.7-billion acquisition of supermarket chain Whole Foods that stocks a wide range of fresh produce, meat, seafood, flowers and other items (read: Will Amazon's 2-Hour Whole Foods Delivery Skew Retail Pitch?)

Price Performance (Year to Date)

It goes without saying that Amazon has been a pioneer in minimizing the gap between online and offline retail space. Brick-and-mortar giants like Walmart, Kroger and Target, which so long, in order to compete with Amazon, were stressing on increased investments in e-commerce, have perhaps realized that bridging the online and offline gap is the ideal way to compete. Amazon has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In February, Walmart announced that it will be expanding its delivery service to 100 metropolitan areas by the end of 2018 with orders fulfilled at more than 800 stores across the country and delivered to shoppers contracted through Deliv, Uber and other delivery contractors.

The Kroger Company (KR - Free Report) too is increasingly focusing on the delivery aspect. The company is into a partnership with same-day grocery delivery service Instacart and delivers groceries for Kroger stores in 45 U.S. markets.

Summing Up

It goes without saying that the retail war is more focused on the delivery race now. The idea is to lure more customers on the convenience quotient and most retailers are busy reallocating their investments to add muscle to their delivery service wing. Needless to say, the gap between online and offline retail is fast disappearing and it’s only a matter of time when others jump the bandwagon.

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