Target is one of the largest retailers in the nation, with more than 1,790 stores in 49 states. The store stays fully stocked for shoppers thanks to its 37 distribution centers in 22 states. Of course, many shoppers prefer to fill their carts from the comfort of their own home, and the fulfillment process is quickly shifting to store-level.
During the 2015 holiday season, online orders were shipped from just 460 stores. One year later, the store was shipping orders from at least 55 percent of its stores, according to Chief Operating Officer John Mulligan during Target’s third quarter fiscal 2016 earnings call.
Benefits of Target’s Store-to-Customer Shipping
Having its stores serve double-duty as fulfillment centers of sort is bringing Target a host of advantages. Sending goods out from local stores cuts down costs for both the retailer and customers, because packages don’t have as far to travel. During the call, Mulligan also touted the ability to better balance inventory across stores, while reducing markdowns in stores with a large volume of product.
He also noted that store shipping has helped relieve pressure on busy fulfillment centers, especially during peak seasons. This has created extra space in the company’s three delayed allocation centers, allowing more room to house slower moving, harder to forecast inventory. Another added benefit of shipping from stores is the ability to send orders faster, which is a hit with customers and creates more space on store shelves for additional inventory.
Store Shipping Could Cause Internet to Sales Surge
Target’s Internet sales totaled $575.4 million — 3.5% — of sales during the third fiscal quarter of 2016. This is a 21% rise from the same time period in 2015, when online orders totaled just $475.6 million — 2.7% of all sales. If customers are able to get their orders faster, with lower shipping costs, it seems reasonable to assume the retail giant’s online segment is headed for a major growth spurt.
Shipping online orders to customers isn’t the only way Target stores are changing the shopping experience. Customers at 80 stores can now do their shopping online, and head to the store to pick up their order in a designated spot at the front of the store.
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