Target Launches Prime-Like Membership as Same-Day Delivery Proves a Bright Spot

Target is revamping its Target Circle program to look more like, say, an Amazon Prime or a Walmart+ — a move that comes as same-day delivery sales rise, while other channels take a hit.

The retail giant announced Tuesday (March 5) alongside its fourth-quarter and full-year fiscal 2023 earnings results that it is transforming the loyalty program to add the new Target Circle 360 paid membership, offering free same-day delivery from the retailer’s on-demand delivery aggregator Shipt as well as free two-day shipping from Target, among other perks.

“We’ve prioritized building strong relationships with guests since Target’s inception, and our reimagining of Target Circle continues that commitment,” Cara Sylvester, Target’s executive vice president and chief guest experience officer, said in a statement, adding that the goal is to “deliver more value and ease” while providing a shopping experience that feels more “personal” and “rewarding.”

The revamp also includes two other components — a free tier, which now auto-applies discounts, and the Target Circle Card, renamed from the Target RedCard, which includes debit, credit and reloadable cards and which offers 5% off at the retailer, free two-day shipping and other perks.

Tuesday’s earnings report revealed that even as Target’s comparable sales were down 4.4% year over year in the quarter, and digital sales overall dipped by 0.7%, same-day service, which includes in-store pickup, curbside and Shipt, rose 13.6%, led by strength in curbside (or Drive Up, as Target calls it). As such, it makes sense that the retailer would be turning its focus to ways to appeal to consumers’ growing demand for same-day options.

The news of the paid membership comes about a month after reports circulated that Target was considering such a launch.

Consumers are doing more of their retail shopping via paid subscription, and these programs are eating away at traditional retailers’ market share. A PYMNTS survey of nearly 2,700 U.S. consumers conducted last year revealed that 61% of U.S. consumers were Amazon Prime members, and 26% were subscribed to Walmart+.

These kinds of subscriptions prompt many consumers to make fewer purchases in traditional stores. According to the PYMNTS Intelligence study “The Replenish Economy: A Household Supply Deep Dive,” which drew from a survey of more than 2,000 U.S. consumers, 42% of retail subscribers said they are shopping in-person less frequently or have stopped completely.

Plus, some consumers continue to go to stores, but only to pick up their online orders. PYMNTS Intelligence’s study “2024 Global Digital Shopping Index: The Rise of the Click-and-Mortar Shopper and What It Means for Merchants,” commissioned by Visa Acceptance Solutions, found that 14% of consumers are pickup shoppers, preferring to buy online and collect their items at the store. As such, the same-day pickup perks of Target’s paid membership could help drive loyalty with this growing demographic.

“[W]e’re making strategic investments that expand on our core strengths, further elevate our guest experience and deepen our connection to both current and new guests,” Target Chair and CEO Brian Cornell said in a statement.

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.