Target (TGT) has announced a $100 million investment in expanding its sortation centers to boost next-day delivery. The investment will include the addition of at least six new centers to the nine existing ones located across six states in the US. The sortation centers' model involves retrieving packages from 30 to 40 local Target stores every day, sorting and batching them, and routing them for delivery to local neighborhoods via a third-party carrier or Target-owned Shipt.
Since the introduction of its first sortation center in 2020, Target has seen a 150% increase in the number of orders delivered to shoppers the next day. The company expects to deliver 50 million packages from sortation centers this year, double the number in 2022.
Why it matters
Target invested $100 million in expanding its "sortation" centers as it aims to build a flexible supply chain. This move was expected, as the company had previously announced plans to adapt to changing customer needs. Due to the surge in online sales during the pandemic, Target faced difficulties fulfilling online orders in its stores, which have served as both in-person and online customer hubs for many years.