Target takes aim at rival paid memberships
By Wealth of Geeks via AP
In March, Target announced upgrades to their signature free loyalty program, Target Circle, including the launch of Target Circle 360. The new 360 membership program comes with a monthly membership fee and offers perks beyond the standard Target Circle program. It started accepting its first members in April.
A large study of membership and loyalty programs by McKinsey found that free loyalty programs increase the likelihood of consumers spending more by 30%. Those numbers double for paid loyalty programs. So, converting existing members onto the paid program is likely Target’s primary strategy.
The good news is, for many, the added expense will be worth it.
Who is Target
aiming at?
What do you get in return for upgrading to Target Circle 360?
Free Same Day Delivery in as little as one hourDeliver to your door — or someone else’s
Same-day delivery from the more than 100 other retail partners in the Shipt Marketplace
No-rush returns — get an extra 30 days to return items
Plus, all the standard benefits of Target Circle
The membership benefits focus on fast delivery, which is a customer favorite. Studies show 49% of shoppers prioritize a brand that offered free same-day or next-day delivery. As membership numbers rise, Target may start to shift its focus from converting existing members to converting its competition.
Amazon vs. Target
vs. Walmart
Consumers will quickly compare other loyalty and paid membership programs, the most popular of which, of course, is Amazon Prime. Amazon Prime has approximately 180 million members in the U.S., and its membership program offers more benefits with Amazon’s array of Prime platforms, including Amazon Music Prime, Prime Reading, and Prime Video.
Those are in addition to free same-day and two-day shipping from Amazon’s online marketplace. The loyalty of Amazon Prime members has been tested before, but thanks to its vast marketplace, consumers know they can find what they need on Amazon. The Prime ecosystem cements that loyalty. Customers who own an Amazon device like a Kindle or Amazon’s assistant Alexa are likelier to be Prime members.
Although many shoppers will make the comparison with what’s on offer at Amazon, Target Circle 360 will need a comparable ecosystem to compete directly with Prime.
However, with cheaper membership fees, ordering from Target and having products arrive in an hour will be a big draw for many existing Target customers. So, although consumers won’t discontinue their Prime memberships any time soon, there’s no reason they wouldn’t join both programs.
Walmart is a more obvious direct competitor for Target, and its paid loyalty program, Walmart+, has grown since its release in 2020. Though released 15 years after Amazon Prime, Walmart’s offering is more mature than Target’s, and its benefits reflect this, such as member savings on fuel, video streaming with Paramount+, and free shipping on orders.
Another subscription to your monthly bills
The subscription economy has made huge advances over the last decade. It grew more than 300% from 2012 to 2019, according to Business Wire. Consumers are getting used to the idea that products and services they like are worth a recurring bill every month. With the perceived value and importance to shoppers of fast delivery, are grocery stores becoming pay-to-play?
Professional recipe developer and founder of Delish Knowledge, Alexandra Caspero, says she couldn’t live without Walmart+. “It allows for free grocery delivery in usually 2-3 hours, and we go through a lot of groceries! Most days, I order my groceries while dropping off the kids at school, and they are delivered before lunch, saving me so much time each week.”
While many will choose the in-store experience to buy Target products to save on membership fees, for busy parents with babies like Caspero, subscribing to Walmart+ or Target Circle 360 is worth the subscription fees. The one-off. same-day delivery fee of $9.99 will quickly make shoppers reconsider buying into Target Circle 360, too.
Drive Research recently found 34% of respondents shopped at a club store like Sam’s or Costco weekly, while 56% visited a superstore like Walmart or Target. 61% shop in a mainstream grocery store such as Safeway or Publix at least once a week. Interestingly, the weekly users of Amazon’s online retailing was much lower, at 26%. So, although more people pay for Amazon Prime, they shop more regularly at all types of grocery stores.
So, if you want the convenience of groceries delivered to your door and to keep using all the stores you like, you may need to subscribe to more than one loyalty program or pick your favorite store and save a few dollars. With Target, you still have the free tier option, at least for now.
