In the efforts of Target to compete with the growing operations of American e-commerce giant Amazon.com, the company has announced that it would buy technology with $550 million for the company for them to be able to start offering same-day delivery to its customers.
The Minneapolis-based grocery and retail store chain announced that it has purchased grocery delivery service company Shipt in a $550 million deal in order to start offering same-day deliveries to its customers starting next year.
Despite the growing competition in the retail market during the past year due to the customers increasingly favoring online shopping and shops that offer same day deliveries that led to a growing number of physical department stores and retail stores closing and shutting down, Target was still able to deliver a positive third-quarter earnings report that were above most analysts estimates.
The company’s same-store sales grew by 0.9% beating most forecasts of 0.4% in sales growth. Most of the company’s earnings for the quarter also came from their online sales which rose by 24% showing an improved online performance for the company.
One of Target’s efforts in making sure it can directly compete with the likes of Wal-Mart and Amazon includes a major overhauling program with its business. The turnaround plan includes a $7 billion plan to refurbish its existing branches, plans to open smaller stores and an investment in the online expansion of Target due to online shopping’s growing popularity. Target has since then pushed its efforts up in e-commerce integration and physical stores being improved with better product presentation.
Aside from these efforts, Target also has begun offering new in-house brands like Cat &Jack which will help the company get more people to visit its physical stores. Target’s third-quarter performance also boosted the outlook for the company’s growth outlook in the coming quarters.
Despite the positive earnings report from the company, Target posted a slightly weak outlook for its holiday quarter sales and earnings sending the shares of the company down by as much as 9%.
Target’s acquisition of Shipt will be considered as a wholly owned Target subsidiary. However, the business will be independently according to a statement. The company will then continue to work on expanding its partnerships with other retailers who are looking to offer same-day deliveries or services.
Customers of Target who wishes to receive the said benefits starting next year are opted to sign up to Shipt where a text will be sent to the person once an order has been placed. Aside from Shipt delivery, a voice-enabled shopping option with Google Express is also planned to be offered to customers.
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