Target is launching a paid membership program next month in a bid to boost revenue and market share as consumers remain cautious about spending.
The new program, called Target Circle 360, will effectively compete with Amazon's Prime and Walmart Plus. Target added several upgrades to the existing Circle program and Circle credit card.
With Target 360, members will get free two-day shipping and the ability to deliver it to their door, or someone else's. They will also get same-day delivery from Target’s delivery service, Shipt, and its retail partners, for orders over $35. They will be delivered in as little as an hour with no delivery fees, according to the company.
Anything from "from groceries to household essentials to the newest must-have item with no additional fees, no markups, and support from a preferred shopper," said Cara Sylvester, Target’s chief guest experience officer, during the company's full-year earnings call.
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From April 7 through May 18, new members can sign up for Target Circle 360 for $49 for the first year before it jumps up to $99 annually.
Target Circle cardholders will get the service for $49 annually.
The paid membership is one of the innovations the company is rolling out as part of its "roadmap for growth aimed at meeting consumers where they are, reigniting sales, traffic and market share gains, and positioning Target for profitable growth in 2024," CEO Brian Cornell said in a press release.
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It's also upgrading its free Circle rewards program. Deals will now be automatically applied to a shopper's cart at checkout, so they no longer have to search for and add offers, according to Sylvester.
"They'll continue to receive partner perks with Ulta Beauty and Apple, and even more rewards through personalized bonuses based on their shopping behavior," she said.
Target Circle credit card holders will get an extra 5% on each trip on top of the savings they receive as Target Circle members. They will also get free two-day shipping and an extra 30 days to return an item, according to Sylvester.
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The news comes after sales at its stores open for at least a year declined 4.4% in the fourth quarter as consumers fight persisting inflation. Online sales fell 0.7%, better than the 6% decline in the prior quarter.
Michael Fiddelke, Target's CFO and COO, said the company is still "planning cautiously" heading into 2024, given the consumer spending patterns the company has seen over the past two years.
"More specifically, on the discretionary side of our business, even as we have seen improving trends over the last two quarters, overall demand remains soft," he said.
The company expects same-store sales to decline between 3% and 5% in the first quarter.
