One of the reasons Amazon.com (NASDAQ:AMZN) has been so successful disrupting retail is that few retailers had any lasting loyalty from consumers. Target (NYSE:TGT) and Walmart (NYSE:WMT) were convenient, and shoppers may have had preferences between the two, but there wasn't a loyalty program or ecosystem of offerings that made a retailer "sticky" for consumers.
Target is trying to change that with a variety of new offerings. There's the loyalty program called Target Circle, which has been added to Drive Up, the Target Red Card, and an app that allows for shopping online and discounts in-store. Together, they may make Target as sticky a brick-and-mortar retailer as Amazon's Prime has been in e-commerce.
Building loyalty one step at a time
Amazon has built loyalty with customers using Prime as a big, sweeping program that brings fast shipping, streaming TV, free photo storage, and more under one umbrella. Target is trying to build loyalty with a number of different packages that are built around the store.
Target Circle is the company's new loyalty program that earns customers 1% savings on purchases at Target, plus regular coupon deals in the Target app and a 5% off shopping trip on your birthday. The program will launch Oct. 6, and Target hopes it'll help the company to engage more with consumers.
The Red Card has long been a big selling point for Target regulars, bringing 5% savings on every purchase. The card will automatically enroll users in Target Circle, but it's a big selling point for going to Target stores if you have a card.
Another great addition for customer loyalty has been Drive Up, which allows you to order online and simply pull into a designated parking spot at a Target store and have your order delivered to your car. For consumers on the go or parents who don't want the hassle of bringing the kids into the store, this is a big benefit. And there's only a short wait until your order is ready, not two days to get items shipped.
Target is trying to make shopping at its stores easier, and Target Circle, Red Card, and Drive Up are big reasons to be frequent users. But there could be more features on the way given the company's move to sending products to people's homes from its stores.
The missing item
A glaring piece missing from the loyalty programs is fast delivery from the newly acquired Shipt. The company will deliver orders to your door in as little as an hour, but it's somewhat separate from Target's regular offerings today. There's a $14 per month or $99 per year membership fee on top of the slightly higher costs associated with Shipt goods. But if convenience is of value, it's a great service.
Target could use Shipt as another value item in its services to customers. It could make people consider Target instead of getting items shipped from Amazon, just for the sheer speed. But the membership fee is steep if it's only used once or twice a month, so pricing will be key in a wider rollout.
Keeping up with the changing times
Target seems to have found a strategy that's working in growing the retail business slowly but surely. It's not taking on Amazon in its home turf on the internet; instead, it's leveraging stores and loyalty programs to keep customers coming back again and again, even if they don't set foot inside a store. As far as big-box retailers go, this seems to be one with a good strategy to maintain its current business while slowly expanding with more offerings that add incremental value for customers.