On Target: Inside Our Stores-as-Hubs Strategy
Upbeat ambient music plays throughout. A Target department store is seen from above on a sunny day. White text appears over a red background.
ONSCREEN TEXT: On Target
A white Target Bullseye logo centers a red background. The screen splits into squares with rounded edges and shifts through multiple images of Target employees working in stores and warehouses.
White text appears over a light-red background beside a Target Bullseye logo.
ONSCREEN TEXT: Stores as Hubs
Cars park in the lot outside a Target department store.
NARRATOR: From the beginning, our stores have been a key connection point with our guests.
A woman sits on her couch at home, shopping using the Target app on her phone. Then, a Target employee collects the order in-store, before another employee collects a Target box from the back of a van and delivers it to the front porch of a suburban home.
NARRATOR: The rise of online shopping presented new choices and challenges for retailers looking to reach consumers in an increasingly digital world. While some opted to move away from physical stores and others abandoned brick and mortar altogether, we chose a different path.
A construction crew builds the roof of a sprawling department store.
NARRATOR: We made a big bet on our stores as a way to serve our guests and deliver growth and profitability.
A woman carries a basket into a sleek Ulta Beauty store within Target. Bold white text centers a red background.
ONSCREEN TEXT: Stores as Hubs
NARRATOR: This is our stores as hub strategy, a strategy dependent on the evolution of the Target store. Strategic inventory management, same day services, last mile solutions and the target team.
The screen splits in two. On the right, white text appears over a red background. A corresponding image appears on the left as the text appears.
ONSCREEN TEXT: Stores as Hubs
CHAPTER 1
The evolution of the Target store
A grainy image from 1962 shows a packed parking lot in front of the original Target store in St. Paul, Minnesota.
ONSCREEN TEXT: CHAPTER 2
Strategeic inventory management.
An employee scans inventory on warehouse shelves.
ONSCREEN TEXT: CHAPTER 3
Same-Day Services
An employee smiles as he carries a shopping bag to a customer parked in an order pickup location outside a Target store.
ONSCREEN TEXT: CHAPTER 4
Last mile solutions
An employee unloads a Target box from the back of a delivery van.
ONSCREEN TEXT: CHAPTER 5
The Target Team
An image shows four employees smiling in a Target warehouse.
Now, two employees high-five in the clothing department. Standing in a circle in the warehouse, workers clap during a meeting. Customers walk beneath the Target sign outside a store. White text appears on a red background.
ONSCREEN TEXT: CHAPTER 1
The evolution of
the Target store
NARRATOR: The evolution of the Target store.
A large red square appears on the left of the screen. White text appears in the top left corner.
ONSCREEN TEXT: 2017
Four squares split up the right side of the screen. Images of a Target store appear in the top two. White text appears in the bottom two squares.
ONSCREEN TEXT: 03 year
ONSCREEN TEXT: $7 billion
NARRATOR: In 2017, we announced a three-year, $7 billion investment to drive growth. Digital was a big focus of this investment.
New text appears in the red square.
ONSCREEN TEXT: Investment in digital and
stores for future growth
Images on the right show customers using the Target app to shop, pick up, and make returns.
NARRATOR: But in contrast to other retailers, we committed to investing in our stores.
New text appears in the red square.
ONSCREEN TEXT: Maximize store potential
An image of an in-store Order Pickup and Exchanges & Returns counter appears on the right, along with a picture of a Target clothing department, and a stylish display in a home goods department.
NARRATOR: Critics made their doubts known, but we had conviction that our carefully curated assortment, combined with using our stores as hubs, would elevate our guest experience and maximize our asset base of nearly 2000 stores.
New text appears in the red square.
ONSCREEN TEXT: Stores as Hubs
On the right of the screen, three images appear of Target employees managing inventory in a warehouse. Now, a man, John Mulligan, interviews in the office of a high-rise building. White text appears in the bottom left of the screen.
ONSCREEN TEXT: John Mulligan
Executive Vice President and Chief Operating Officer
JOHN: Probably the biggest inflection point was when we doubled down on it in 2017 and we said, look, in an era when everything was going digital, we said it's about the stores.
As John continues to speak, Target employees help customers as they shop. Organized, well-lit displays and products are shown.
JOHN: So, if people are going to come into your store, you've got to create a great experience. And that means continually remodeling, bringing the best of the best back, then improving our merchandising skills so that we did a better job in how we presented product on the floor. And it also means having the right product there at the right time. Along with that, we said, OK, we're going to fulfill those through our stores. We think we can create a great pickup experience. We think we can ship from our stores because we have all this excess capacity that sits in our low volume and medium volume stores. And so, we continue to build on that today. We continue to invest in our store experience through our team and remodels. And you've seen us continue to build capabilities on top of what we did back then all the same day services that have really been built over the last five years. And we'll go wherever the guest wants to go from here.
White text appears on the left of the screen over a red background.
ONSCREEN TEXT: Remodels
2017
More than half of our stores
remodeled to date
On the right of the screen, a Target store is seen from above. Solar panels are installed on the roof in the shape of the Target Bullseye logo.
NARRATOR: Since 2017, we have remodeled more than half of our stores with hundreds more slated for enhancements.
New text appears on the left.
ONSCREEN TEXT: Freshen store designs
Backend improvements
On the right, a remodeled front-end of the store is shown, along with an organized warehouse space.
NARRATOR: The remodels not only freshen the aesthetics of a store. They include backend improvements like retrofitted fulfillment spaces that enable ship from store.
New text appears on the left.
ONSCREEN TEXT: Drive growth
On the right, a full Target parking lot is seen on a sunny day.
NARRATOR: Remodels also help drive growth. Following a remodel, traffic gains across the store help drive an average 2% to 4% sales lift in year one and another one to 2% lift in year two.
White text appears in two red squares above images of customers shopping at Target.
ONSCREEN TEXT: 2% to
4% sales lift
ONSCREEN TEXT: Year
01
The text changes as the narrator speaks.
ONSCREEN TEXT: 1% to
2% sales lift
ONSCREEN TEXT: Year
02
A man, Mark Schindele, interviews on the main floor of an office building. White text appears in the bottom left of the screen.
ONSCREEN TEXT: Mark Schindele
Executive Vice President and Chief Stores Officer
MARK: Our stores hub strategy starts with delivering an amazing experience for our guests every single time they walk in our store. And when I think back to 2017, we knew we needed to invest in our stores to elevate our experience so we can give that amazing experience for our guests.
As Mark continues to speak, white text appears over a red background on the left of the screen. Images of in-store Ulta Beauty displays, Disney displays, and Apple displays appear on the right.
ONSCREEN TEXT: Remodels
STORES AS HUBS
ONSCREEN TEXT: Elevate the design aesthetics
Launch new brands
Invest in team and
operational spaces
Launch Same-Day Services
MARK: This enabled us to elevate the design aesthetics, launch new brands like Ulta Beauty at target, Disney and Apple, invest in team spaces and operational spaces, launch same day services.
Images of an employee break room and an order pickup space are shown. An employee slides a Target bag across the counter a customer.
MARK: By transforming our guest experience, we could offer our guests more ways to experience our brand.
A sunlit Target store is seen from above. Then, a woman walks into an inner-city Target. A sign reads, “University of California.” Palm trees line the street outside a Target store with terra-cotta roof tiles. Target employees laugh and high-five as they walk through a store.
NARRATOR: In addition to remodeling stores, we have also introduced 20 to 30 new stores every year in a variety of sizes, and formats to reach guests in big cities, college campuses, suburban neighborhoods and everywhere in between. Our approach includes partnering with the local community to design a gathering place that is both a shopping destination and a hub for delivering goods quickly, efficiently and cost effectively.
Artistic murals read, “Together we can.” In a warehouse, employees pack Target boxes and load a delivery car. John interviews from an office.
JOHN: So every four or five years we come up with what we would call our latest prototype. What's our latest thinking on store design and what do we want the store to be?
White text appears over a red background beside images of a Target store with an “order pickup” drive thru, and EV charging stations in the parking lot.
ONSCREEN TEXT: Katy, Texas
TARGET STORE DESIGN ENHANCEMENTS
JOHN: And you've seen us in Katy, Texas, get a little bit bigger, and that's to add fulfillment capabilities. You see the local community represented in that store.
Interior shots of the store show an artistic map of Texas on the wall, wooden beams crossing the ceiling above grocery displays, and bright overhead lights throughout.
JOHN: lots of light. So the store is very bright and of course, clean like ours always are. And then a great merchandising experience. Our merchants pick out great product and they work with our store teams to be sure we're presenting it the way our guests wants.
Images show employees walking down a spacious corridor in the back of the store, as well as Target boxes on a conveyor belt system.
JOHN: And then the back room is significantly larger and that's so that we have room to put in six pack stations and a little bit of automation and things we need to do to continue to grow ship-from-store and create a great experience so we can get the product out to drive up really quickly or to order pickup very quickly. All of that came into the design for the Katy, Texas store.
White text appears over a red background.
ONSCREEN TEXT: CHAPTER 2
Strategic inventory
management
NARRATOR: Strategic inventory management. To realize our stores as hub strategy, we created one inventory for in-store and digital sales. So instead of investing in separate fulfillment models for digital and in-store orders, we built a single system that draws from one universal inventory. By carefully curating what products are available to stock and sell, we keep our lineup fresh while using our stores as mini fulfillment centers.
Text appears in a red box on the left of the screen. On the right, images appear of employees working in warehouses and the back-end of Target stores.
ONSCREEN TEXT: One inventory for in-store
and digital sales Careful curation
Fresh assortment
Over 95% of total sales fulfilled by stores
A woman, Gretchen McCarthy, interviews in a high-rise office. White text appears in the botton left of the screen.
ONSCREEN TEXT: Gretchen McCarthy
Executive Vice President and Chief Supply Chain and Logistics Officer
GRETCHEN: As we think about how to fully maximize and optimize stores as hubs, there are two main drivers.
Employees load vehicles with target boxes in a warehouse parking lot. Then, an employee drives a delivery van down a neighborhood street and delivers boxes to a front porch.
GRETCHEN: The first is optimizing our last mile expenses, and the other way that we maximize our supply chain is how we think about the placement and positioning of the inventory that we're sending to stores.
Product boxes drop down a metal slide in a sorting facility. Employees in high-visibility orange vests arrange the boxes on a pallet. Workers walk along the cement floor of a massive warehouse. Boxes of product roll down a streamlined, automated conveyor belt.
GRETCHEN: One of the most important decisions that was made that isn't unlocked for stores as hubs is we have one omnichannel inventory. And what that affords us is the flexibility to develop inventory flow strategies that are aligned to the store that they're sending them to.
White text appears in a red box to the left of images showing Target employees packing orders in a back room, loading boxes onto a warehouse conveyor belt, and delivering orders to customer homes. A Target cargo truck pulls out of a receiving bay.
ONSCREEN TEXT: Ship from store
STORES AS HUBS
ONSCREEN TEXT: Dedicated backroom space
Reduce costs
Easier and faster
Less shipping and
warehouse overhead
NARRATOR: Dedicated backroom space for packing guests orders brought our ship-from-store model to life. We minimize the resources and costs needed to move inventory over long distances from large scale fulfillment centers to guests’ homes. This approach makes it easier and faster for guests to get what they want in the way that they want it. It also reduces shipping costs and avoids overinvestment in new warehouses that are expensive to build, operate and maintain.
Gretchen interviews.
GRETCHEN: In the back rooms of our stores are mini fulfillment centers. And as a piece of that mini fulfillment center, there's something called a pack station.
As Gretchen continues to speak, an employee works at a pack station. She scans products, loads them into a box, then lines the box with shipping air pillows. Team members work at another pack station, accepting a cart of products from a coworker, then taping shut a box and applying a label. She sets the box on a conveyor belt, and other team members arrange the boxes on a pallet.
GRETCHEN: It's essentially a workstation for a team member filling an order where they have the needed supplies and they're able to take the handoff from the team member who has picked the order and actually pack it right there in one place, put the label on it and set it aside for the team to pick up and move to either a sortation center or direct to the guest. The number of pack stations a store has is what unlocks the ability to ship more volume. And so that's where we have stores that have just a few because they have a high percentage of sales that are driven by guests coming into the store. And then we have other places where we've taken advantage of the capacity that we have in some stores that might be lower volume or lower traffic stores, but are able to move a tremendous amount of volume.
White text appears in a red box beside images of employees gathering products in a back room.
ONSCREEN TEXT: Ship from store
STORES AS HUBS
ONSCREEN TEXT: Rapid growth
3x digital business since 2019
NARRATOR: Since the introduction of stores as hubs in 2017, our model has generated rapid growth more than tripling our digital business, and many competitors have emulated our approach.
Team members wheel carts of orders into a back room. At an order pick-up desk, an employee passes a customer a bag of products.
NARRATOR: Today, stores hubs remains a durable strategy, enabling us to flex and thrive, to meet the demands of a dynamic environment and evolving consumer preferences.
John interviews.
JOHN: The great thing about capacity is we still have a lot more of it in our stores as hub model. If you go back to 2017, 18, 19, I think I was asked this on every quarterly earnings call that when are you guys going to run out of capacity? And then the pandemic hit and our sales per square foot in our stores increased 37%.
Social distancing, an employee talks to a customer in a Target store. Both wear masks. Text appears in red boxes to the right.
ONSCREEN TEXT: Sales during
pandemic
ONSCREEN TEXT: 37% increase
JOHN: Awesome. And we didn't even blink an eye, right? We continued to meet the needs of our guests. When I look at today, if I compare the lowest quartile of our stores from a sales per square foot perspective to the highest quartile, there is massive capacity still sitting within our network and we push the sales right to the lower volume stores so that they can turn more units. But our higher volume stores, they may be doing a great drive-up business too, and they're able to do that. So, we can continue to grow the whole chain. And I think when you step back from us, just us looking at ourselves, if you look at our sales per square foot relative to some of our competitors, we've still got a long way to go. There's still a lot of asset utilization for us and a lot of return on invested capital as we continue to drive more sales through what is primarily our existing asset base.
White text centers a red background.
ONSCREEN TEXT: CHAPTER 3
Same-Day Services
NARRATOR: Same day services.
A red pillar labelled “drive up” stretches up into a blue sky. A Target employee greets a customer at a sleek Order Pickup Registry location. Another employee waves after loading a customer’s car at a “drive up” service stall.
NARRATOR: Our journey started almost a decade ago with in-store order pickup service. Since then, we have continually expanded and refined our same day service options so that today, guests can place an order online and choose to pick it up in store, have it delivered to their vehicle using Drive up or have it delivered directly to their home.
White text appears within a red box.
ONSCREEN TEXT: Online orders
ONSCREEN TEXT: Order Pickup
Drive Up
Home delivery
Employees stand at carts outfitted with laptops in the back of a Target store. Another employee wears a “drive up” vest as she loads a car with shopping bags. White text appears in a red box.
ONSCREEN TEXT: Service expansions
ONSCREEN TEXT: Pilot
Refine
Scale
Grow and improve
NARRATOR: Using a test and learn approach, our team pilots new services, refines them, scales them, and then explores ways to make them even better.
Signage on an awning on one side of a Target store reads, “drive up,” and “order pickup.” Sitting in his car, a customer displays the Target app on his phone as he uses the service.
NARRATOR: In recent years, drive up has further expanded to include fresh and frozen food items, adult beverages and most recently, Starbucks and returns.
White text appears in a red box beside images of a produce department, a shelf of wine bottles, and a Starbucks to-go bag.
ONSCREEN TEXT: Expanded Drive Up
services
ONSCREEN TEXT: Fresh and frozen food
Adult beverages
Starbucks orders
Returns
An employee loads the back of a customer’s van with Target “drive up” bags.
NARRATOR: This continuous improvement mindset impacts every aspect of our stores as hub strategy.
John interviews.
JOHN: To me, the very best example of that is drive up, and drive up goes back to 2013. We started doing order pickup in our store and we were learning how to pick and how to path and all that. And we layered on ship-from-store and it didn't really work great. We said, OK, we got to step back. We got to, kind of, get pick and patting down first. And we did that. And then we layered in ship-from-store, and then we decided, you know, we need a new solution for someone who wants us just to bring it out, put it in their trunk. Back then, the solution of the day was windows. If you come between 2 and 4:00, we'll have it ready for you. And we chose to go a different path. That's telling the guest when they can come to our store. Let's tell the guest, we'll have that picked, packed and ready for you in two or three hours, usually quicker. We'll let you know when. We'll send you a text and say it's ready, and you show up when you want. And when you show up, we're going to try and be out there in three minutes or less and get in the trunk of your car.
A woman, Leandra Hulett, stands interviewing from the floor of a Target store. White text appears in the bottom left corner of the screen.
ONSCREEN TEXT: Leandra Hulett
Group Vice President, Store Operations
LEANDRA: The most important thing about drive up: it's so quick. If you have 13 kids in the back of your van and you want to pick up something on the way to soccer, all you have to do is drop an order. You can pull right in and be on your way. And the coolest thing about it for me is – and for my team – is we're able to help the guests as quick as we can. And that's really what people want today. They want to get in, they want to get out. They want to get what they need, and that's an experience that we provide for them.
Text appears in red boxes to the left of the screen as Mark interviews on the right.
ONSCREEN TEXT: 2017
ONSCREEN TEXT: Same-Day
Services
MARK: In 2017, we first started testing same day services.
ONSCREEN TEXT: 2019
ONSCREEN TEXT: Nationwide
Drive Up
MARK: In 2019 we were nationwide with drive up and order pickup. We're always listening to our guests to find out where they want us to go. And what they told us in 2020 is they wanted fresh grocery and frozen grocery available for drive up. So we launched that in 2020.
White text appears in four different red boxes beside an image of a Target fresh food department.
ONSCREEN TEXT: Drive Up
expansions
ONSCREEN TEXT: 2020
Produce
and frozen
foods
ONSCREEN TEXT: 2021
Adult
beverage
ONSCREEN TEXT: 2022
Starbucks
and returns
MARK: Then we launched adult beverage in 2021. And then last year in 2022, the top two things on our guest list was, boy, I'd love to have a Starbucks when I come in for my drive up order and it would be really convenient if I could return an order at drive up. And so that's why we test new services in a very small group of stores and we get feedback from our team about what's working well, what's hard, what can improve that experience.
White text appears in a red box beside an image of a customer receiving his drive up order.
ONSCREEN TEXT: Focus on innovation
ONSCREEN TEXT: Design partnerships
Assortment
New experiences
MARK: At Target, we're always focused on innovating. And that's through design partnerships, assortment, new experiences for our guests that enables ease and efficiency.
From above, a grey SUV pulls into a Target drive up stall. An employee walks out of the store carrying a bag and a package of diapers and delivers the order to the customer with a smile.
NARRATOR: Not only are these same day services great for our guests, they've been strong growth drivers too. Same day services reached more than $11 billion in 2022 compared to a digital business that was about $6 billion in 2017. That growth was incremental to other growth in stores and the ship-tohome business.
White text appears in a red box beside an image of a customer and her two daughters collecting an order at the Order Pickup Registry.
ONSCREEN TEXT: Same-Day Services
GROWTH DRIVERS
ONSCREEN TEXT: $11 billion
In 2022
John interviews.
JOHN: First and foremost, if you want to improve the profitability of the company, grow sales. And what we've shown over time is that if we can have a guest interact with us through drive up or through same day delivery, what we see is a 20% to 30% incremental increase in sales for Target.
White text appears over a red background.
ONSCREEN TEXT: Same-Day Services
GENERAL SALES IMPACT
ONSCREEN TEXT: 20%-30%
incremental increase
in sales for Target
JOHN: Just as importantly, from our perspective, the same day capabilities we've built have pretty good economics. If you think about order pickup and drive up, those economics are very, very similar. Not quite the same, but very similar to when a guest comes into our store and does the work on our behalf. Similarly, when we ship from a store, from our perspective, it's 40% cheaper than shipping from a fulfillment center that is much further away.
White text appears in a red box beside an image of an employee arranging Target-branded boxes on a pallet.
ONSCREEN TEXT: Shipping from
a store is
~40%
Cheaper
As John continues to speak, employees fulfill orders at a pack station.
JOHN: And so there's lots of great economics that are built into the stores as hub model. There's lots of questions about yes, but isn't your pick inefficient relative to somebody who has an automated warehouse? Fair question. Fair point for sure. But when we look at the total economics of what it takes to get a product from our store to our guests, the big thing is always last mile.
A delivery van drives down a snowy, tree-lined boulevard. White text appears over a red background.
ONSCREEN TEXT: CHAPTER 4 Last mile solutions
NARRATOR: Last mile solutions.
More text appears in a red box beside an image of a Target box on a conveyor belt.
ONSCREEN TEXT: Fast
Affordable
Convenient
NARRATOR: As guest expectations for fast, affordable and convenient delivery rise, so do our efforts to meet them.
Text appears beside an image of a delivery driver unloading a box from the back of a van. ONSCREEN TEXT: Expanded last mile
delivery capabilities
NARRATOR: We've made big investments in our last mile delivery capabilities to get packages to guests with optimal speed, cost, and quality.
Text appears beside an image of a customer ordering a puzzle with the Target app.
ONSCREEN TEXT: Same-Day Delivery
NARRATOR: In 2017, we acquired a same day delivery capability that enables guests to place an order and have it delivered for a fee or as a part of a membership.
Text appears beside an image of a man delivering two Target shopping bags to a suburban house.
ONSCREEN TEXT: Coast-to-coast
capabilities
ONSCREEN TEXT: Flexibility for guests
NARRATOR: We were one of the first retailers to offer this level of service coast to coast, and the service means guests pay the requisite delivery costs and have flexibility in how they use the service.
A Target sortation center is seen from above on a clear winter day. An employee uses a pallet jack to move a full pallet inside.
NARRATOR: The introduction of sortation centers in 2020 accelerated our efforts to expand local fulfillment options, providing speed, capacity and quality all at lower cost.
White text appears over a red background.
ONSCREEN TEXT: CHAPTER 4
Last mile solutions
ONSCREEN TEXT: Speed
Capacity
Quality
Lower costs
NARRATOR: In fact, since 2019, fulfillment costs decreased by 20% on a per unit basis.
ONSCREEN TEXT: 20%
decrease in total digital
fulfillment costs since 2017,
including improvements in
last-mile delivery costs
John interviews
JOHN: The beauty of stores as hubs is today we have stores in great locations with 75% of the US population is within 10 miles of our store.
White text appears within a red box.
ONSCREEN TEXT: ~75%
of the population
is within 10 miles
of a Target store
JOHN: So we can get very rapidly to most of the population within a day and combine that with 95% of the sales we do are fulfilled by our store.
White text appears within a red box.
ONSCREEN TEXT: Stores fulfill
~95%
of all purchases
JOHN: So we've built this great stores as hub model. Now the next evolution is how do we get faster and how do we get cheaper?
ONSCREEN TEXT: Faster
Cheaper
Gretchen interviews.
GRETCHEN: The build upon that was the introduction of our sortation centers. A sortation center is a facility that is actually downstream from our stores. And what a sortation center unlocks is the ability to be that much closer to our guests.
As Gretchen continues to speak, workers are seen managing packages and boxes at a sortation center.
GRETCHEN: These are facilities that are able to take in inventory from 30 to 40 stores, depending on the market and route that inventory to the guests based on where the package is needed. That physical movement of inventory is powered by technology that creates the ability for us to ship packages to guests through either a national carrier, a local injection into the postal service, or using last mile delivery drivers to deliver it just within a few hours to the front door. An investment in something like a sortation center is an acknowledgment that we can meet the guests needs, deliver on speed, but we can do it at a lower cost.
A woman in a high-visibility vest, Doire Perot, interviews from the floor of a sortation center. White text appears in the bottom left corner of the screen.
ONSCREEN TEXT: Doire Perot
Operations Director, Supply Chain
DOIRE: Before sortation, our ability to deliver to our guests was just much, much slower. So, sortation really unlocks speed. It unlocks value. It unlocks for the guests when they think, how can I get this next day? How can I get this in two days? Sortation makes that available to them. And now we're sorting upwards of 40 to 45,000 packages a day during peak season. So, the efficiency we've worked through in the last 2 and 1/2 years has really brought that to life and we've come a long way in that time period.
Two images appear of employees meeting in a Target store. Then, text appears beside an image of a Target employee helping a customer in the home goods department.
ONSCREEN TEXT: Since 2019
~40%
ONSCREEN TEXT: Total sales
growth
NARRATOR: Our investments have dramatically increased store productivity. Since 2019, our store base has grown only slightly, while total sales grew nearly 40%.
Text appears beside an image of a customer using the Target app for a drive up order.
ONSCREEN TEXT: 3x
ONSCREEN TEXT: Digital sales
growth
NARRATOR: Our digital business nearly tripled in size.
Text appears beside an image of an organized, well-lit Target store.
ONSCREEN TEXT: 37%
ONSCREEN TEXT: Growth of
sales per
square foot
NARRATOR: And sales per square foot in stores increased by 37%.
Text appears beside an image of a Target drive up entrance.
ONSCREEN TEXT: ~2,000
ONSCREEN TEXT: Existing stores
NARRATOR: By using our existing asset base of nearly 2000 stores and by investing in sortation centers to accelerate last mile delivery capabilities, we are both driving and supporting significant growth at a lower operational cost than if we had opted for a traditional warehouse-based model.
White text appears in a red box.
ONSCREEN TEXT: Sortation centers
increased last mile
delivery capabilities
White text appears in a red box.
ONSCREEN TEXT: Driving and supporting growth
Lowering costs
NARRATOR: These investments continue as we've committed to spend $100 million to expand our sortation center network to more than 15 facilities by the end of 2026.
Text appears beside an image of employees cutting a celebratory ribbon at a sortation center.
ONSCREEN TEXT: $100M
ONSCREEN TEXT: Expanding
sortation
network
By 2026
NARRATOR: This includes new target last mile delivery extension facilities that put next day delivery in reach of even more guests within a market.
Text appears beside an image of two employees shaking hands behind a delivery van.
ONSCREEN TEXT: Target Last
Mile Delivery
extension facilities
ONSCREEN TEXT: Expands reach of
sortation centers
in strategic markets
Mark interviews.
MARK: Our store teams love sortation centers. We are able to remove workload from our back rooms and move it and centralize it to a sortation center. So we no longer have to do a secondary sort within our back rooms. That's all done at a centralized location. It also enables us to ship faster to guests and at a lower cost.
Gretchen interviews. White text appears within a red box beside images of a sortation center.
ONSCREEN TEXT: Lower
last mile
costs
GRETCHEN: The beauty of the sortation center strategy is that by getting that much closer to our guest, we're actually able to remove costs from the last mile, delivering the economics that we need to continue to scale and grow our fulfillment business.
ONSCREEN TEXT: Scale
ONSCREEN TEXT: Grow
GRETCHEN: Even though the sortation center concept has only been around for just a few years, we're already learning and testing new concepts to even further extend that reach, improve the density of packages and increase the number of our customers who have access to a sortation center market.
Text appears beside images of employees working in a sortation center.
ONSCREEN TEXT: Target Last Mile Delivery
extention facility
Increases reach of a sortation
center within a market
GRETCHEN: So we are testing a concept that literally is an extension of the sortation center. It's an even smaller facility that will take an injection of packages from our sortation center and another group of last mile delivery drivers are able to reach some of the outer suburbs of some of these major markets.
Text appears beside an image of customers receiving at home deliveries.
ONSCREEN TEXT: Increased access
to guests and
delivery volume
GRETCHEN: We're able to increase the amount of packages that can be delivered through our Target last mile delivery.
White text appears over a red background.
ONSCREEN TEXT: 2022
26 million
packages delivered
GRETCHEN: Last year, we delivered 26 million packages. This year we're on pace to double that number.
ONSCREEN TEXT: 2023
52 million
packages delivered
GRETCHEN: And we believe that through our expansion to more than 15 sortation centers by the end of 2026. The sky's the limit for the amount of volume that we'll be able to move through these sortation centers.
Text appears beside images of employees working in a sortation center.
ONSCREEN TEXT: More than
15 sortation centers
by the end of 2026
White text appears over a red background.
ONSCREEN TEXT: CHAPTER 5
Team Target
NARRATOR: Team target.
Text appears beside images of employees working at an Order Pickup Registry, and in a warehouse.
ONCSREEN TEXT: Stores as Hubs
Investment in facilities
and our team
NARRATOR: Stores as hubs is more than an investment in facilities and processes. It's an investment in our team too.
ONSCREEN TEXT: 2017
ONSCREEN TEXT: $11
Minimum wage
NARRATOR: In 2017, we raised our minimum wage to $11 with a commitment to offer a $15 minimum wage by the end of 2020.
ONSCREEN TEXT: 2020
ONSCREEN TEXT: $15
Minimum wage
NARRATOR: We met that promise and in 2022 we raised the minimum starting wage range to $15 to $24 and expanded health care benefits.
ONSCREEN TEXT: 2022
ONSCREEN TEXT: up to
$24
minimum
starting
wage
NARRATOR: This includes a debt free education benefit called Dream to be, which offers easy, affordable access to degree programs for all full and part time team members.
ONSCREEN TEXT: 2022
ONSCREEN TEXT: Dream to Be
Mark interviews.
MARK: We have an amazing team that's at the heart of everything we do, and it's our team that enables us to have industry leading same day services and fulfillment offerings. So it's very important that we continue to invest in our team to drive their career growth. And it's also important that we keep our team members fresh with their training.
Two employees meet on the product floor. Then, a team leader trains an employee in a sortation center.
MARK: And so we train our team members to be flexible, to go where the guest is going. And that flexibility is what enabled us to meet the significant increases of demand that we saw with same day services. We also invest in their work output. And so we're constantly listening to our team about where is their friction in their workload or what are things that are particularly hard to do. And then we redesign processes or we launch new technology to make our teams jobs easier and to make our team more efficient.
Myriad employees pose with smiles in their workplaces. Doire interviews.
DOIRE: Creating a space where people can come to work, be their authentic selves, and simultaneously deliver a cutting edge, innovative strategy and supply chain. I can't think of something better than that.
The façade of a Target store is shown on a sunny day. An employee oversees boxes on a conveyor belt, someone pushes a cart through a sortation center, a customer picks up an order at the Order Pickup counter, solar panels are installed on the roof of a Target store, and a Target cargo truck pulls out from a sortation center delivery bay.
NARRATOR: From outlier to growth driver, our store as hub strategy anticipated guests needs with flexibility, scale, and efficiency. We continue to believe in the power of our stores to earn guests’ loyalty, lift sales and create sustainable long-term growth.
Target employees smile and laugh as they work.
NARRATORS: Stores as hubs is a model designed to deliver a great experience for guests while preserving a healthy bottom line. And by continuing to test, learn, iterate and scale, we are positioned to continue evolving to meet our guests ever changing needs.
A white Target Bullseye logo centers a red background. The music fades.