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Will 2-Day Shipping Offer Lend Target Edge Over AMZN & WMT?

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In response to the ongoing delivery war, Target Corporation (TGT - Free Report) is all set to offer two-day free shipping during holiday season. Further, the offer will be valid from Nov 1 to Dec 22 and not include any minimum purchase or mandatory membership. This is in addition to services like Shipt and Drive Up that Target offers for convenient delivery, specifically during the holiday season.

Analysts believe that the move will enable Target to better compete with rivals like Walmart (WMT - Free Report) and Amazon (AMZN - Free Report) . Per media reports, Walmart and Amazon have treaded this path earlier with the former offering two-day free shipping on purchases above $35, in January 2017. Amazon also provides the same benefit to its customers with prime membership of $119.

In addition to this, Target stated that it will expand Drive-Up services to almost 1000 stores. The company’s same-day delivery services via Shipt is now available nationwide across 46 states. According to media reports, Target is also planning to fulfill 90% of its online orders from inventories. Also, the company announced plans to create new space for its toy business across more than 500 stores to gain market share.

In order to gear up for the holiday season, Target is on track with its recruitment plans. Per media reports, Target intends to employ 1,20,000 associates, reflecting a 20% increase from the prior-year. Further, the company expects job applications to rise 40% ahead of the season. According to NRF, retailers are likely to appoint 585,000-650,000 temporary employees this festive season, up from 582,500 in the last year.

With consumer-spending soaring, retailers are upbeat about the festive season. Data compiled by NRF, which is the nation's largest retail trade group, calls for a 4.3-4.8% rise in November and December sales (excluding autos, gas and restaurant) to $717.45-$720.89 billion, up from $687.87 billion last year. This is better than the five-year average sales growth of 3.9%.

We note that this Zacks Rank #2 (Buy) company has gained 26.7% year to date, outperforming  the industry’s growth of 21%.

 



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