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Will Ramping Up Delivery Help Target (TGT) in Race to Success?

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Target Corporation (TGT - Free Report) is trying all means to gain lead in the grocery delivery race, aggressive expansion of same-day delivery is one of the ways. In the online delivery space, the company is in direct competition with the likes of Amazon (AMZN - Free Report) , Walmart (WMT - Free Report) and Kroger (KR - Free Report) .

The retail landscape was altered by Amazon’s buyout of Whole Foods, fusing online and traditional retail. The deal compelled brick-and-mortar grocery retailers to make concerted efforts to shift from physical stores to an online platform. In line with such plans, companies are remodeling stores and investing in revamping of digital operations.

How Are the Others Placed?

Amazon has taken giant strides in the market, taking over share from grocery retailers. To counter such advances, Kroger has come up with Kroger Ship, its direct-to-customer e-commerce platform that offers faster and free home delivery on orders valued more than $35. Further, the company’s deal with British online grocery delivery company Ocado reinforces its position in the online ordering, automated fulfillment and home delivery space.

Another prominent player, Walmart, has gained ground by coming up with services, spanning from the sale of grocery to offering meal-kits online. In its latest move, the company tested a new last-mile delivery service, namely, Spark Delivery. Walmart also recently raised its stake in Dada-JD Daojia to 10% in a move to strengthen its last-mile delivery service and enhance omni-channel offering.

The company’s contracts with DoorDash, and ride-hailing service providers like Uber and Lyft for speedy online grocery deliveries along with the acquisition of last-mile delivery service Parcel Inc bode well. Walmart has also inked a deal with Postmates to extend its online grocery delivery service, with an intent to cover more than 40% U.S. families. The company also entered into a deal to acquire Cornershop, Inc., a renowned online platform for on-demand delivery from specialty food retailers, supermarkets and pharmacies to boost its omni-channel presence in Latin America.

Target’s Game Plan

As the online retail war heats up, fast and on time deliveries has been the focus of all companies. Target has also made concerted efforts on the same-day delivery front through the takeover of Internet-based grocery delivery service provider Shipt. The company has launched same-day delivery of more than 55,000 groceries, electronics, toys and other assortments in various markets.

Target also acquired a transportation technology company — Grand Junction — to expand its supply chain and improve delivery capabilities. Grand Junction provides a platform that allows retailers, distributors and third-party logistics providers to manage local deliveries through a network of more than 700 carriers. Drive Up, an app-based service, is another initiative by Target to expedite the shopping process. The service allows customers to place orders using the Target app and have them delivered to their cars.

Wrapping Up

All said, it looks like competition among grocery retailers is far from subsiding, which has resulted in price wars and aggressive promotions.

Meanwhile, as grocery players strongly focus on stepping up their efforts, we are hopeful that Target’s will be able to withstand this competitive frenzy. This can solely be attributable to its strategic endeavors, which involve the deployment of resources to enhance omni-channel capacities, launch of brands, remodeling or refurbishing of stores, and expansion of same-day delivery options.

These have helped this Zacks Rank #3 (Hold) stock rally 48.9% in a year, surpassing the industry’s rise of 40.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



 

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