Our secret sauce to delivering orders (and joy) to Target guests with speed and efficiency for years to come? A robust network of more than 15 Target sortation centers — with the ability to reach guests across major U.S. markets — by 2026. Our team is continuously evaluating ways to increase operational efficiencies and in turn, deliver what our guests need and want, when they want it. This expansion is yet another way Target is delivering a best-in-class shopping experience through our stores-as-hubs strategy.
Why sortation centers?
Increased speed and efficiency
In markets with a sortation center, we retrieve packages daily from a range of 30 to 40 local stores, depending on the market, and bring them to the sortation center to sort, batch and route for delivery to local neighborhoods by a third-party carrier or Shipt delivery route, depending on the lowest-cost carrier option. These facilities help lower costs and create efficiencies for our supply chain operations while increasing speed of delivery for our guests.
Time and space savings for our team
By removing the sorting and packing process from our store backrooms, we save valuable time and space for our store teams to fulfill additional orders and serve guests. And because our sortation center technology presorts and arranges packages for easy pickup, it reduces processing time for our delivery partners. As Target’s stores fulfill the bulk of online orders, our sortation centers have made this process even faster.
What we've learned
Growth of our sortation center network allows us to serve more guests, faster
Target currently has ten sortation centers open in Minnesota, Texas, Colorado, Illinois, Georgia, Florida and Pennsylvania. In August, we opened our latest sortation center in Miami, Florida. Since the start of our sortation center operations, these facilities have helped to increase the number of orders delivered to guests the next day by more than 150%.
This June, Target took a step to extend the reach of its sortation centers by opening its first Target Last Mile Delivery extension facility, located in Smyrna, Georgia. This facility receives local, pre-sorted packages from our Atlanta sortation center and stages them for pickup and next-day delivery by drivers on the Shipt platform to additional neighborhoods. Built at a fraction of the cost of a full-size sortation center, the TLMD extension brings our next-day delivery capabilities to more than 500,000 additional guests in the greater Atlanta market.
Target Last Mile Delivery with Shipt improves the delivery experience
In examining ways we could further increase our supply chain efficiencies, we’ve brought Target Last Mile Delivery — our lowest-cost delivery option — to all our sortation center facilities. Through Target Last Mile Delivery, we collaborate with our partners at Shipt, and drivers on the Shipt platform sign up to deliver batches of orders that have been sorted hyper locally down to the neighborhood level. Currently, up to 40% of Target Last Mile Delivery orders with Shipt are delivered by the next day, and we expect to deliver more orders next day as we expand our network. This provides a fast, efficient, reliable and low-cost delivery option for our business, benefiting both our guests and the bottom line.
Where we're headed
Expansion of facilities across major U.S. markets
We're expanding our next-day delivery capabilities to guests across major U.S. markets through a $100 million planned investment to scale our flexible, best-in-class sortation center network to more than 15 facilities by the end of 2026. Through this investment, we plan to open more than five additional sortation centers by the end of 2026.
Expansion of larger capacity vehicles
In 2022, we began testing the use of larger capacity vehicles, in partnership with Shipt, to increase both flexibility and speed in delivering for our guests. This year, in partnership with Shipt, we've expanded options for drivers to take advantage of larger routes where they can use larger-capacity vehicles, including delivery vans, that can hold up to eight times more packages per route. We're currently testing the use of larger capacity vehicles to deliver orders at two of our sortation center markets, with plans to expand to all markets in the next few years.
What this means for our guest and team members
Sortation centers are expected to double their delivery volume to more than 50 million packages in 2023, with a growing number of items delivered to guests the next day. The use of sortation centers will also support our store team members as they meet the needs of our guests — whether they shop in-store or online — quicker and more efficiently. As we grow our network, we anticipate creating hundreds of additional jobs in local metro areas with market-leading wages. Sortation centers are an important piece of the strategy here at Target, and we’re excited to continue testing and learning along the way.
