Target launches paid membership program as it chases new revenue streams | CNBC
Target is stepping up its game in the competitive retail market by launching a new paid membership program, Target Circle 360. Set to debut in April, this program is priced at $99 per year, with an introductory offer of $49 until May 18. Target Circle 360 aims to enhance customer experience by offering unlimited free same-day delivery for orders over $35, two-day shipping, and other exclusive perks. This move is a strategic effort to boost sales and create a new revenue stream, as Target has seen a decline in comparable sales for three consecutive quarters.
The success of similar programs from Amazon and Walmart inspires Target Circle 360. Amazon Prime, launched in 2005, offers free two-day delivery, streaming services, and more for $139 per year. Walmart+, introduced in 2020, provides free shipping, grocery deliveries, and gas discounts for $98 per year. These membership programs have proven significant drivers of customer loyalty and sales.
Target’s CEO, Brian Cornell, believes that the paid membership will encourage more online orders, catering to customers who prefer home deliveries. The program will be powered by Shipt, a company Target acquired in 2017 that uses independent contractors for delivery services. This initiative is part of Target’s broader strategy to revitalize its e-commerce business, which has seen a decline in digital sales over the past year.
In addition to Target Circle 360, the retailer is revamping its free loyalty program and credit card, making them more user-friendly and personalized. The Target Circle card, formerly Target RedCard, offers a 5% discount on purchases, free two-day shipping, and extended return periods.
Target’s move to a subscription-based model reflects a growing trend in the retail industry, where memberships create a steady revenue stream and enhance customer engagement. Target is positioning itself to compete more effectively in the evolving retail landscape by emulating the successful strategies of Amazon and Walmart………….
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Considering Target’s new membership program and its potential impact on consumer behavior, how might this strategy influence the company’s market position relative to its competitors, and what are the implications for the retail industry?
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Target’s new membership program could definitely have a big impact on its market position. By offering exclusive benefits to members, it can attract more loyal customers and potentially gain an edge over its competitors.
I agree with this, if target has a brand-new membership, it will greatly affect the position because of the benefits they will cause with consumers from the company.
Target’s membership program may influence other retailers to do the same. Thus, changing the retail business into a membership based market. This may also influence customers to shop more frequently to get the most out of their membership benefits.
A successful membership program can drive revenue growth for Target by encouraging members to spend more and shop more frequently. Additionally, membership fees can provide a steady stream of revenue for the company, helping to offset costs and improve profitability.
Targets new program could sway other companies to do something similar. It would definitely increase target sales because you could save money by buying the membership.
Given that Target’s customer base is already so large and extremely loyal, this membership program will only serve to increase loyalty and size. Ultimately, this has to potential to drastically increase Target’s revenue if successful.