What Target Restock Means for the Retail Industry

Earlier this month, Target revealed that it's testing a new service called Target Restock. The service, which is currently in trial with Target employees ahead of a customer-facing pilot this summer in the Minneapolis area, is designed to offer an easy way for consumers to shop online for household essentials that will arrive the day after they place their orders.

Once the pilot is live this summer, Minneapolis-area customers that have a REDcard, Target's credit card, can visit a dedicated online experience to access more than 8,000 household essentials. From there, they’ll be able to fill a box with multiple items and have their orders shipped to their homes for a flat fee. The items will be packaged at a nearby store, allowing Target to fulfill orders placed before 1:30 p.m. by the next business day. Currently, Target is working with UPS on Restock, but plans to test the service with various shipping providers going forward.

The pilot is clearly meant to compete with similar offerings from rival retailers, like Amazon.com’s Prime Now and Prime Pantry Service, and Wal-Mart’s same-day grocery delivery and pickup. In addition, same-day grocery delivery is offered by third parties like Instacart, Shipt, Peapod, Postmates and others, which work with local stores.

What does same-day delivery of grocery and other household essentials mean for traditional online and offline retailers? And what are some things retailers should do in the long and short term to better compete with Target, Wal-Mart, Amazon and others that are winning the home-delivery wars? To find out, we asked a few industry experts and service providers. Here are their thoughts:

Sarah Engel, Chief Marketing Officer, DynamicAction

“As an immediate action, retailers must focus attention on their own data to identify areas of opportunity, be that in-store experience; buy online, pick up in-store; or same-day home delivery. If their customer understanding leads them to same-day or next-day delivery, retailers can look to partner with home delivery services and use the data to gain a connected view of the customer across channels and promote online and in-store products, promotions, or categories accordingly. Retailers should look to their physical store footprint as an asset and not a detriment, and engineer ways to increase traffic while leveraging the store as the hub of retail operations for all channels.”

Patti Hester, Chief Strategist, E-Commerce and Distribution, Platinum Circle Partners

“Keep in mind that Target Restock is a grocery offering, and many grocery offerings have failed due to lack of density. There are, however, steps companies can take to stay competitive:

• Know your customers’ preferences and make it convenient. Whether it’s in-store pickup, curbside pickup, same-day/next-day delivery, shipped directly to pick up locker or customer's home, it’s important to remember that customers demand choice. It’s the retailer’s job to recognize and address what’s most needed and preferred for its customer demographic.
• Make sure your pricing is in check — for both product and shipping. Highly competitive shipping pricing is required today. Be sure to review your service partners and programs on an annual basis.
• Stay in your lane. Know how your strategy competes with the big players. Target's market focus has little immediate impact on traditional e-commerce value propositions."

Sucharita Mulpuru, Independent Retail Industry Analyst

“Well, my first suggestion is to try to get out of the business of selling the same commodities that bigger, more aggressive retailers are selling. If you must sell those commoditized goods, it’s best to employ third-party marketplaces and work with as many shipping partners as possible to minimize costs and maximize delivery speed.”

Barry Pellas, Chief Business Technologist, PointSource

“Personalization and user-focused strategies are key to staying competitive as we enter the next phase of home delivery solutions. The better companies understand their users’ journey, the better they can optimize the customer experience and increase loyalty. Once the experience has been personalized, retailers should examine the landscape and identify additional optimizations with an intense focus on the user. This can have rippling effects across the organization, from allowing better access to real-time data to further transformation goals around business objectives and key performance indicators.”

Tushar Patel, Chief Marketing Officer, Kibo

“It’s too soon to tell how Target’s service will fare against Wal-Mart and Amazon, but this we know: it will eventually come down to price and delivery. We know that a large portion of consumers want, and are accustomed to, quick deliveries with little to no fees. We believe that in the short term, retailers should continue focusing on the perfect combination of price, shipping and order fulfillment by using buy online/pick up in-store or ship from store options. In the long term, retailers should worry less about constantly chasing the big three and focus more on executing on innovative strategies that will improve or add value to a customer’s experience. In the case of home delivery, focus on the little things that might make a big difference in the end.”

Greg Portell, Lead Partner, Consumer Industries and Retail Practice, Americas Region, A.T. Kearney

“As is usually the case, the simple answer is generally the best. Successful retailers are those that maintain a focus on their customers — from preferences to patterns to needs. Technology and jargon that don’t matter to consumers are simply shiny objects that distract from what's really needed to win — strong merchandising and insightful marketing. By building solutions that constantly evolve and eliminate the friction from consumer desire to transaction, retailers can create competitive advantage.”