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Target is testing a new plan to increase its fulfillment capabilities and flexibility, according to The Wall Street Journal. Target’s plan outlines several different strategies, including using the same inventory to both replenish store shelves and fulfill online orders, sending a greater number of shipments to stores from warehouses while reducing each shipment to the smallest possible size, and merging distribution and fulfillment systems for greater synergy.
While a warehouse in Perth Amboy, New Jersey is currently the only location piloting this “flow center” approach, Target may roll out the new strategy to other locations if it’s successful. This test comes amid a variety of recent upgrades to the Target shopping experience.The retailer seems to be focusing on ensuring that shopping with Target is as seamless and simple as possible for customers.
The retailer announced plans last December to open at least 23 new locations by 2021, many of which will be small-format stores.
This April, it launched same-day delivery in 60 stores in urban areas to help customers without access to cars move larger items.
Target continues to expand services, including curbside pickup, flat rate next-day delivery, and two-day shipping, to make shopping with it even more convenient.
The new fulfillment plan may be a response to a sales bump from the 2017 holiday season and early 2018. Target has seen an uptick in sales growth that started last November and December, and continued through this past February. While the sales numbers have been positive, overall profits have been suffering from issues with high fulfillment costs. The retailer’s efforts to retool its system could be the product of trying to reduce these costs in the long term and glean more profit from high sales.
If successful, the new initiative may be a boon to Target.As e-commerce continues to grow and the retail environment gets more competitive, being able to respond flexibly to the shifting landscape will be a huge advantage for Target. More efficient fulfillment, delivery, and inventory management methods will make it easier to implement all of the omnichannel methods Target is trying to put in place.
The new plan can also help the retailer eliminate overhead and reduce wasted space in both stores and warehouses, which could increase efficiency even further. This potential overall rise in performance, along with an expanding physical presence, could allow Target to offer consumers a shopping experience consistent with their expectations, and may lead to a major long-term rise in sales, both online and in-store.
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Source:: Business Insider