Target Follows the Amazon Prime Playbook

The retailer is looking to spark its turnaround with its own version of an e-commerce membership.

Photo of exterior of a Target store
Photo by Mike Kalasnik via CC BY-SA 2.0

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If you can’t beat ‘em — and you’re not anywhere close to beating ‘em — copy ‘em.

Target said Tuesday it’s launching an Amazon Prime-esque (and Walmart+-esque) membership program called Target Circle 360. The firm is presumably hoping the program will help its slagging sales do a 180.

Let’s Circle Back Around

Perhaps it was only a matter of time. Investors have long valued the recurring revenue boon provided by subscription services. And while Walmart, which launched Walmart+ in 2020, still doesn’t report total membership figures, its CFO said on a recent earnings call that the program is still seeing double-digit growth and that members spend nearly double that of a typical non-member on an annualized basis.

Target Circle 360 will launch in about a month, at a rate of $99 per year (though a promotion through May 18 will price it at $49), and will offer customers unlimited free same-day shipping for orders over $35, and free two-day shipping, among other perks. It may just be the jolt the big-box retailer needs:

  • Comparable sales fell for the third quarter in a row, the company announced in its earnings call Tuesday, while overall annual sales declined for the first time since 2016.
  • Its e-commerce unit is just as sluggish. Digital sales fell by almost 1% year-over-year in the fourth quarter, completing a year-long streak of declining e-commerce business.

Right on Target: Still, Target posted an overall revenue beat above analyst expectations, generating nearly $32 billion over the holiday season. While that’s roughly flat compared to results from a year ago, the company is still riding a pandemic-era boom, with recent fourth-quarter sales around 35% higher than 2019 levels. All of which was enough to send Target’s share price soaring over 12% on Tuesday. In other words, investors seem to think they’re right on… well, you know.