Target to Spend $100M on Supply Chain Hubs to Speed Up Order Delivery

Target announced this week that it will spend $100 million to build a larger network of supply chain hubs to speed up and lower the cost of delivering online orders. The retailer plans to have at least 15 of the facilities, dubbed sortation centers, by the end of January 2026. It already has opened nine after testing the concept in its hometown of Minneapolis. The expansion will also grow Target’s workforce. On average, more than 100 people work at each sortation center. Target began testing sortation centers, a facility where packages arrive from about 30 to 40 nearby stores, get grouped into more efficient delivery routes and get picked up by a third-party carrier or a vehicle of a contract worker for Shipt, a third-party delivery company that Target owns.

Total Retail's Take: The addition of new sortation centers into Target's supply chain network will help to alleviate inventory glut at the company's brick-and-mortar store backrooms, cutting down on the percentage of online orders that are fulfilled in-store and freeing up associates' time to enable them to better serve customers. In a statement sent to Total Retail, Brian Kava, CEO of PICKUP, noted this investment is a step toward meeting customers’ needs for efficient, convenient delivery.

“Retailers have set the bar high for e-commerce shopping and delivery experiences. As a result, there’s a constant expectation of fast or even same-day delivery options. As consumers continue to turn to e-commerce for their shopping necessities, retailers must respond to their expectations for quick, convenient delivery.

"To effectively manage e-fulfillment, retailers must position their inventory in the right places. It’s important to evaluate the different processes involved in inventory management, given ongoing supply chain issues, including scarcity of raw materials and products, as well as labor shortages that can slow down the movement and transportation of items.”