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Target stakes its e-commerce future on hub investments

Target announced on Wednesday that it will invest $100 million in expanding its network of supply chain hubs in order to speed up and reduce the price of fulfilling online purchases.

By the end of January 2026, the store hopes to have at least 15 of the sortation centers. After piloting the idea in Minneapolis, the company has already launched nine locations. Target’s staff will increase as a result of the expansion. Each sortation center employs more than 100 employees on average.

Even though it is dealing with an excess of inventory and a definite decline in sales, the firm is placing its bets on e-commerce growth. Target revised its forecast for the Christmas quarter and disclosed intentions to make up to $3 billion in cost reductions over the following three years. On Tuesday, it will present its fiscal fourth-quarter results as well as its forecast for the entire year.

The company’s e-commerce sales growth has also slowed, in part because of the early pandemic’s fast spike that made for difficult comparisons. In the most recent reported quarter, which concluded in late October, digital sales rose by less than 1%. Comparatively, third-quarter growth from a year earlier was close to 29%.

Predicted a rougher year ahead, following the sales surge caused by the epidemic and as inflation puts a strain on household budgets. Walmart stated that it anticipates same-store sales for its U.S. division to increase by 2% to 2.5% in the fiscal year, excluding gasoline. Home Depot stated that it anticipates sales growth to remain around flat for the fiscal year.

No of the state of the economy, according to Gretchen McCarthy, chief global supply chain & logistics officer at Target, the company must meet customer expectations, particularly those related to making online purchases promptly and conveniently.

“There is no doubt that we constantly monitor consumer spending. In reference to the retailer’s revised prediction, McCarthy stated, “We are taking recent patterns into consideration.

source: CNBC



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