Target Circle 360 Expands Same-Day Delivery - Retail Experts Debate if It's Genius or Disaster
Target's Bold Same-Day Delivery Gamble - Will It Pay Off?
Target makes a major play in the membership wars by expanding Circle 360 to include same-day delivery from 100+ partner retailers. Our expert panel is split down the middle on this strategy.
Key Moments:
0:00-0:45 - Target's announcement: same-day delivery expansion with no price markups
0:47-1:25 - Chris Disa defends the move as a consumer who already subscribes
1:26-2:30 - Anne questions the financial viability and subscriber conversion potential
2:31-4:00 - Michael's scathing critique: "should never have left the innovation room"
4:01-6:30 - Chris Walton piles on: Target's strategic confusion vs marketplace investment
6:31-7:50 - Chris Disa's counterargument: widening assortment for same-day needs
7:51-8:35 - Competitive comparison to DoorDash Plus restaurant delivery
8:36-10:00 - Michael reveals hidden operational pitfalls and store labor issues
The debate reveals deep strategic questions about Target's direction and competitive positioning.
This week's episode was brought to you with the help and support of the A&M Consumer and Retail Group, Simbe, Mirakl, Ocampo Capital, Infios, and ClearDemand.
#target #samedaydelivery #retailstrategy #TargetEarnings #walmartplus #targetnews #RetailOperations #retailnews
For the full episode head here: https://youtu.be/Qx2hUtMWmTY
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Transcript
Target Circle 360 members can now shop same day delivery with 100 plus retailers according to Retail Dive.
Speaker A:Through its ship service, the mass retailer will give subscribers access to same day delivery at Petco, PetSmart, CVS and more, all without price markups.
Speaker A:Target Circle360 has a membership price of around $99 annually and new signups for Target Circle360 can get $20 off their first order of at least $75, said Kara Sylvester, Executive Vice President and Chief Guest experience Officer at Target.
Speaker A:Quote, We've built a true digital shopping center experience making your Saturday errand run easier, faster and more affordable.
Speaker A:End quote.
Speaker A:Chris Disa Are you buying or selling the new same day delivery perk for Target Circle360 members?
Speaker B:I am absolutely buying this as a consumer.
Speaker C:You are?
Speaker B:I am.
Speaker B:As a consumer, you know, I have Walmart plus Amazon and Target360 and I.
Speaker A:Would say you already have it.
Speaker A:Okay.
Speaker A:You already have it.
Speaker A:Okay.
Speaker B:Most of my same day shopping habit is not solely based on price but availability.
Speaker B:So for me, Target360, you know, in the, in the opportunity to now provide access and service to products from other retailers as cvs, petsmart, et cetera.
Speaker B:I think it's a huge win and I'm all in.
Speaker A:Wow.
Speaker A:Okay.
Speaker A:Starting off strong.
Speaker A:And I think you like this too, right?
Speaker C:Look, I love the idea listening to that Target earnings call today.
Speaker C:That is they are pumping this hard as their like growth engine to continue to combat the earnings that were announced.
Speaker C:I just don't understand how you make money off of this.
Speaker C:That's my biggest question.
Speaker C:Like with zero markups, you know, you still have to make sure that the ship drivers are doing these one to one, you know, deliveries to homes.
Speaker C:Are, you know, is there a need at Target for you to really like, are you expanding to that many categories that Target doesn't already cover?
Speaker C:Like I just, I think it's, I think it's the right competitive move for Target to make in the play against Walmart plus and DoorDash.
Speaker C:But I just don't know if it's compelling enough to get new subscribers on board because of the limited assortment.
Speaker C:It's not, it's not giving me that much more at this point point to, to drive me to get that, that Target plus membership.
Speaker C:I don't think so.
Speaker C:I have to sell, but so you're selling it.
Speaker A:All told, you're selling it.
Speaker C:I have to sell.
Speaker C:I, I, I like the, I, I think it was a strong, it was a strong position.
Speaker C:I just, I don't understand how you make that work financially in the long term.
Speaker C:I, I think it, it's just not, there's not enough there for me or.
Speaker A:If I read between the lines.
Speaker A:You don't think it's going to convert people to target 360 either?
Speaker C:I don't, I don't, I don't think there's enough like, you know, people who are using the same day delivery service is a certain demographic of customer who can afford the, the price increases anyway.
Speaker C:I don't know that you're going to get people to jump ship from a door dash or from an Amazon or something where.
Speaker C:Or Walmart plus even for that matter.
Speaker A:Yeah, well, you got Chris d.
Speaker A:The Super Target 360 Super Fan over here.
Speaker A:So we're going to have to let the conversation at some point.
Speaker A:But first I want to get Michael's opinion on this because Michael, Michael seems a little skipped, skeptical based on his body language and the looks he's giving.
Speaker A:He gave.
Speaker D:If I put a CEO hat on for a second.
Speaker D:Love the concept, hate the operational details of this.
Speaker D:And I can actually envision in that crystal ball I was talking about from Walmart a concept meeting saying, we need to innovate.
Speaker D:How do we innovate?
Speaker D:How do we get better?
Speaker D:How do we not let our competition take share from us?
Speaker D:And someone raising their hand and saying, oh my gosh, I love Amazon prime and I love same day delivery.
Speaker D:Why don't we do that?
Speaker D:And this is, this is a concept, in my opinion, that should have never made it out of that innovation room because operationally I just don't get it.
Speaker D:And I also think, and I'm not talking about Target360, I'm talking about the expansion of it in the same day service.
Speaker D:The other thing, I also think of it as sort of have you ever been to a retailer and you go up to the counter and you have a pile of 10 things you're buying and you haven't shopped with a coupon or you haven't shopped with the sale of the day.
Speaker D:And the Brett person behind the register goes, oh, here, let me scan the coupons for you.
Speaker D:I almost feel like you think of Petco.
Speaker D:I'm going to buy it from Petco anyways.
Speaker D:And then I get in there and it's like same day service.
Speaker D:Like, sure, why not?
Speaker D:Get it same day.
Speaker D:This is awesome.
Speaker D:I just, I don't get it.
Speaker D:I don't understand how they're going to make margin on it.
Speaker D:And not only margin, I don't understand how it's not going to be dilutive to their, to their overall operational standards as well as the, the cost of doing business.
Speaker D:So very cool concept but it should have never made it out of the.
Speaker A:Innov from Holly freaking luya that I 100% agree.
Speaker A:100% agree.
Speaker A:Hallelujah.
Speaker A:I mean I, I would actually add that there's more points to what my.
Speaker A:I agree with everything you said, Michael, but I think there are other points that I don't like about it.
Speaker A:I think I agree with Ann.
Speaker A:I don't think it compels people to, to, to buy a Target360 membership in comparison to every other option that's already out there.
Speaker A:I hate that it's a membership program that's off the actual Target platform like that you have to go to ship to that.
Speaker A:There's still a disconnect in the customer's minds between those two properties.
Speaker A:But here's the thing that really sticks in my craw.
Speaker A:Resources as we all know are not infinite.
Speaker A:The capital is, capital is finite.
Speaker A:And so and my thing is if, and it shows just how lost Target is strategically.
Speaker A:Like if you want to be a marketplace, why wouldn't you instead invest in your actual third party marketplace and making it much stronger and more compelling so you can get the benefits of things like Ann talked about with Walmart, like retail media and you guys, that marketplace has been growing at a snail's pace and that's the first order thing that you do here because you can get the benefits of in store returns.
Speaker A:You can keep the customers loyal to Target through that.
Speaker A:Like it just makes so much more sense in an order operations standpoint.
Speaker A:So it shows to me like yeah Michael, you're dead right.
Speaker A:Somebody came up with this idea in a meeting.
Speaker A:They went for it.
Speaker A:It's, it's probably not going to move the needle at all in the long run.
Speaker A:And there are much simpler, more ROI producing initiatives on the table that Target has just been missing the boat on for so long.
Speaker A:And this is indicative of that to me.
Speaker A:So I 100% agree.
Speaker A:Chris.
Speaker A:Liking this.
Speaker B:I'm still liking this because I think you have to think about who is your customer that's actually paying for this membership.
Speaker B:And if any of you have actually bought anything same day, you may have noticed that either through Walmart or Amazon, a lot of products are not offered for same day delivery.
Speaker B:So to widen the aperture for Target to actually partner with other retailers to expand the assortment for customers that want same day delivery, I think could be very beneficial.
Speaker B:Do I think it's you know, a silver bullet and, and going to help them from a growth perspective.
Speaker B:Maybe, maybe not that remains to be seen.
Speaker B:But I do think that the, the concept in is very interesting.
Speaker B:And again from a consumer lens what I really appreciate is the opportunity to be able to kind of cross shop and actually have products delivered same day that I'm looking for because again, you know, shopping, Walmart and Amazon, a lot of the everyday essentials that I'm looking for are not readily available.
Speaker B:So I'm hoping that this, that Target would provide that.
Speaker A:The other point that's interesting to me too is how long the Petcos and everyone that was mentioned in this article let Target continue to do this too because Target is essentially getting the first party data on this purchase, relatively speaking too.
Speaker A:So that's a fear I have over time if of how does the market respond to Target trying to do this for their loyalty program, which is something the article didn't talk about.
Speaker A:And did you have a thought you want to say?
Speaker C:I was just going to, I was just going to ask Chris Disa quickly like the only counter that I'd have to that is you get that with DoorDash plus you get same day restaurant delivery.
Speaker C:So do you think that Target Circle360 needs to add something else to make that $10 a month or whatever it ends up coming out to be that could get me doordash same day delivery plus restaurant delivery plus you know, essentials and all the other things that I need.
Speaker B:I mean I, you know, thinking about price, I typically find that door dash is more expensive and there's a surcharge.
Speaker B:So to me I would rather again personalizing this.
Speaker B:I would rather stick with Target360 versus having an upcharge.
Speaker C:Sure.
Speaker B:Essentials that I want.
Speaker A:Yeah, that's why they were playing that up in the media.
Speaker A:Michael, sounds like you want to say one more thing.
Speaker A:Go for it.
Speaker D:It's going back to the operational pitfalls of this.
Speaker D:There's a hidden, there's like two layers hidden here.
Speaker D:A lot of the feedback that we've heard from the streets in regards to doordash specifically is that it doesn't work the way you would expect it to work as a retailer in that the burden is placed on all of your own store line employees.
Speaker D:So the door dasher shows up, door dash pitches you.
Speaker D:Our people will go in, find the product, scan it and leave.
Speaker D:What we hear unofficially is that the door dashers go to the person at the front register or manager and say hi, I'm Mr.
Speaker D:And Mrs.
Speaker D:DoorDash can you find this product for me and get it for me?
Speaker D:Because I need to take it out, which is interesting.
Speaker D:The customer is still getting what they want.
Speaker D:However, for the house, like a Target that creates store labor hour issues, it actually is the opposite of efficiency that you're looking for.
Speaker D:So I think from an operational standpoint, there's some pitfalls in this move that are going to come back to haunt Target, which is along the same lines of what Chris Disa said is I think strategically they're missing the mark.
Speaker D:They're kind of looking at a bright, shiny object, using it to divert away from some challenging earnings, and they really should be doing different, more macro strategic targeting of some of the opportunities and challenges they have in their business.
