Target Corp. will make a $100 million investment to add six new package-sorting centers in a push to expand its next-day delivery capabilities. Target is No. 5 in the 2022 Digital Commerce 360 Top 1000.
The new hubs will be operating by the end of 2026, Target said in a Feb. 22 statement. Target already has nine sorting centers, which are located in Colorado, Georgia, Illinois, Minnesota, Pennsylvania and Texas. Target opened its three most recent sorting centers in Chicago and Denver in 2022 as part of an expansion since the first center opened in 2020. The company is still selecting sites for the new ones.
Target delivery investment in sorting centers
The sorting centers are designed to further Target’s strategy of using its stores to handle online orders as it vies with Amazon.com Inc. and Walmart Inc. for sales. Amazon is No. 1 and Walmart is No. 2 in the 2022 Digital Commerce 360 Top 1000. Each hub typically retrieves packages from 30 to 40 local stores, then gets them ready for delivery to local neighborhoods. Target said shipping from these sorting centers is usually up to 40% cheaper than shipping them from big distribution centers.
“I bring it back to our stores-as-hubs strategy,” Gretchen McCarthy, Target’s chief global supply chain and logistics officer, said in an interview. “The sortation centers are pulling that work out of the back rooms of the stores.” Target store employees can then focus on packing pickup orders for customers, the company said.
Target’s sorting centers delivered 26 million packages in 2022, the company said in a press release. The existing hubs are expected to double their delivery volume to more than 50 million packages this year, with a growing number of items being delivered to shoppers the day after they place an order.
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