The Target run — a ritual for many families to stock up on everything from laundry detergent to toilet paper — will soon have a more direct online counterpart.
Possibly as soon as next month, Target Corp. will start testing Target Restock, which is similar to Amazon's Pantry program for Prime members.
Like many other retailers, Target has seen the rising interest among consumers to not just buy books and electronics online, but also increasingly many of those mundane household staples. The challenge has been how to make doing so convenient for customers and cost effective for the retailer.
Toward that end, through Target Restock, customers will be able to fill a large box of a specific size with as many items as can fit in it, choosing from more than 8,000 household essentials, beauty and personal care items and dry grocery products. The box, which is limited to 45 pounds, will then be shipped for a flat fee and arrive on their doorsteps by the next day if they place their order by 1:30 p.m.
Target hasn't yet set the fee for the service, but says it will be competitively priced. Amazon Pantry, which the online juggernaut first launched in 2014 to members of its Prime program, charges $5.99 a box.
Target Restock will initially be limited to Redcard holders and will first be rolled out possibly as soon as next month. The service also will be tested in smaller markets in Minnesota such as in Red Wing and St. Cloud.
"Target is smart, albeit late, to create an offering like this," said Sucharita Mulpuru, an independent retail analyst. "Those consumables are a huge part of what drives shoppers to a Target store. As more shoppers are going online, they need to make sure they're not losing share to Amazon or Wal-Mart and others."
Target's Redcard holders can already get free shipping on online orders. Target also partners with third-party service Instacart in a handful of markets to deliver primarily grocery items, but also a small selection of household essentials, in as little as an hour or two. It also offers a subscription service in which customers can schedule regular deliveries of specific items like diapers or razor blades.
Mike McNamara, Target's chief information and digital officer, said Target Restock is another option for consumers with the goal of providing faster delivery, as well as convenience since the variety of items arrive in one box, instead of in several smaller shipments.
At the same time, Target is trying to drive more traffic back to its stores as it invests in things such as store remodels and launching new brands. McNamara noted that many consumers will continue to opt to go to the store to restock their cupboards. And for those who choose to do so through Target Restock, he thinks customers will still want to visit the store to make other purchases.
"People enjoy going to Target to buy apparel, toys, games, lots of things," he said. "I'm not so sure people have a huge amount of enjoyment about buying toothpaste. What Restock does is it gives you a choice to take some of the drudgery out of that weekly shop, and then you leave all of the fun back in the store so going to the store is a more pleasurable experience."
For Target, it's also more efficient to ship several items to customers together in one box rather than sending numerous smaller orders.
"Encouraging guests to put together a larger cart of goods or a larger box of goods gives a higher order value and that makes good financial sense," McNamara said. "It's one of those things you come across that is great for guests and it's great for Target."
Finding a way to more profitably sell goods online is a top priority for Target, which struggled with squeezed profits and falling sales in the last year. Target executives recently rolled back their profit goals for the upcoming year as Target lowers prices to be more competitive with Wal-Mart and as online shopping continues to erode its margins.
On Sunday, Target is also raising its free shipping threshold for online orders to $35, bringing it in line with Wal-Mart and Amazon. A couple of years ago, Target had lowered its free shipping minimum to $25 to help encourage shoppers to make online purchases.
Wal-Mart also has been stepping up its game online as it looks to directly take on Amazon. Last year, it bought Jet.com, an online marketplace that focuses on restocking everyday essentials and that encourages customers to buy more items at once by giving discounts for adding more items to their basket.
Meanwhile, Amazon has been experimenting with Dash buttons, Wi-Fi connected devices that customers can place around their house to quickly reorder specific pantry or household products. In addition, it has updated its Pantry program so customers can get free delivery if they buy five qualifying items.
A Kantar Retail survey last summer found that about 5 percent of all shoppers, and 13 percent of Prime members, had used Amazon Pantry. The consulting firm also found that products sold through Pantry were very competitively priced, and in some cases slightly lower, compared to Wal-Mart.
So Target needs to make sure that the products in its own Restock program are also competitively priced, especially since many Target shoppers are also Prime members, said Leon Nicholas, chief insights officer for Kantar.
"There's got to be a reason for an Amazon shopper to switch from Pantry to this," he said.
The 5 percent discount that Redcard holders enjoy could be an added incentive. Target's McNamara notes another advantage is that the retailer will be leveraging its vast store network to fulfill these orders.
"That means we have to travel a shorter distance with the Restock box than some of our competitors, so we can get it to you quicker," he said.
Amazon Pantry does not offer expedited delivery since it uses ground shipping.
Target has quickly built out Restock over the last few months. In January, a small team of about 15 began working on the idea. By March, the retailer began testing it among headquarters employees.
"We've learned a ton in a couple of short months," said McNamara. "We've gone at it really quick and really scrappy."
Over time, Target expects to be able to personalize the experience based on a customer's past purchases to make it even faster and more convenient. The team also hopes to be able to add beverages to the list of eligible products.
But first, Target is eager to see how customers in the Twin Cities receive the program. If it goes well, executives hope to quickly expand it to more markets.
"We're going to go as fast as we possibly can," McNamara said. "But it really depends on whether we've got a proposition that our guest thinks is fantastic."
Kavita Kumar • 612-673-4113
