Dive Brief:
- Target will add three new sortation centers to help increase efficiencies in its operations, the retailer announced on Monday.
- Two sortation centers will be in the greater Chicago area and one in the Denver metro area. The new centers will bring Target’s sortation center total to nine as it already has six existing centers in locations such as Houston, Dallas, the Philadelphia area and Lawrenceville, Georgia.
- All three sortation centers will be added in the next year, though a Target spokesperson declined to provide specific dates.
Dive Insight:
Target's sortation centers serve as the next phase of the company's stores-as-hubs strategy that the retailer says will help create efficiencies for its operations.
Sortation centers help remove the sorting process from Target’s backrooms, which frees up space at stores. They also consolidate orders and batch deliveries, easing the job for carriers. As sales grow, these processes help the retailer increase speed of delivery for its customers, according to Target.
Target’s existing six sortation centers handled “4.5 million packages in Q1, a number that's expected to grow significantly throughout the year,” executive vice president & COO John Mulligan said in the Q1 earnings call.
Last year, Target said it would spend up to $5 billion to scale its operations by investing in stores, sortation centers and distribution centers.
“We’re not stopping at nine sortation centers: We’ll continue to invest in our network with additional facilities in new markets in the coming years as we remain focused on building a modern, flexible supply chain that supports our stores, all in service of our guests,” the retailer said.
