Target's two-day holiday shipping option beats Amazon, Walmart

NEW YORK (Reuters) - Target Corp, aiming to one-up retail rivals during the upcoming U.S. holiday shopping season, said on Tuesday it was adding more delivery and pickup options for online shoppers to have items shipped to their homes or ready for quick pick-up at local stores.

A women enters Target after it opened on the Thanksgiving Day holiday in Burbank, California, November 22, 2012. REUTERS/Jonathan Alcorn

The Minneapolis-based retailer will offer free two-day shipping on hundreds of thousands of items from Nov. 1 to Dec. 22 with no order minimum or membership required. Target had announced the shipping service in March.

Target’s two-day shipping option is less expensive than Inc’s, which requires an annual subscription fee of $119 under its Prime membership service. Walmart Inc offers free two-day shipping for a minimum order of $35.

Target will also expand its Drive Up Service, which allows customers to place orders online and have packages brought to their cars by the retailer’s employees. It will include nearly 1,000 stores by the end of October, ahead of schedule.

The company currently fulfills about 50 percent of its digital orders from inventory at its stores and plans to increase that to 90 percent.

Target will also offer same-day delivery on 55,000 items with Shipt, a company it bought for $550 million last year, in “hundreds of markets.” Shipt will offer the service in 200 markets, up from 160 announced earlier.

The biggest changes the retailer has made to its business over the past five years have been on order fulfillment, the final mile of delivering orders from a warehouse or store to shoppers’ homes, Target Chief Executive Officer Brian Cornell told reporters at a briefing on Tuesday.

The offerings will be part of the “Target Run and Done” holiday promotional campaign.

Cornell also said Target’s holiday hiring plans are on schedule. The retailer has received over 100,000 applications in a tight labor market and is seeing a 40 percent rise in job applications for its warehouses. In September, Target said it would hire 120,000 seasonal workers at wages starting at $12 an hour. The company has made a commitment to go up to $15 an hour by 2020.

Last week, Target said it will dedicate nearly a quarter of a million square feet of new space to its toy business across 500 stores, seeking more holiday toy sales after retailer Toys “R” Us Inc went bankrupt this year. Target had said its shoppers will be able to shop for more than 2,500 new and exclusive toys.

Rival Walmart Inc has made a similar push for gaining market share in toys.

In August, Target reported its strongest comparable store sales growth in 13 years and said a strong economy lifted customer visits to the most in a decade.

U.S. holiday sales in 2018 will increase by 4.3 percent to 4.8 percent from a year ago, when consumer spending surged to a 12-year high, according to The National Retail Federation.

The trade body said holiday sales growth will be higher than an average increase of 3.9 percent over the past five years but slower than last year’s 5.3 percent gain, when consumer spending grew the most since 2005, boosted by tax cuts.

Reporting by Nandita Bose in New York; Editing by David Gregorio and Dan Grebler