AMZN Amazon.com Inc

By Khadeeja Safdar 

Target Corp. said it plans to offer free two-day shipping on online orders this holiday season, undercutting competitors like Amazon.com Inc. and Walmart Inc. that have requirements for similar services.

The Minneapolis-based retailer on Tuesday said starting Nov. 1 until Dec. 22, it will offer the service on hundreds of thousands of items without a minimum purchase or membership, a shift from earlier this year when shoppers could receive free shipping only if they spent $35 or used a Target loyalty card.

Walmart Inc. offers free two-day shipping on orders $35 and up, and Amazon offers the services to customers who pay $119 a year for a Prime membership. U.S. retailers are gearing up to compete for shoppers during the holidays, when they derive most of their annual sales.

A robust U.S. economy has been boosting sales at many retailers. Target has lowered prices and invested in its stores and supply chain, helping it recover after a poor performance last holiday season. Last quarter, the company posted its best results in more than a decade.

Target CEO Brian Cornell said the company has been converting its stores into distribution hubs, which has cut the cost of shipping online orders to consumers. The company now fulfills about 50% of its digital orders at its stores and plans to fulfill over 90% of two-day orders from the stores. "It's our stores that are enabling our digital growth and strategy," he said at a media event.

Mr. Cornell said he still expects most shopping to take place in the store and for the company's online fulfillment options to drive more foot traffic. "Even during the holiday season, over 80% of all holiday shopping is going to happen in the store," he said.

Target plans to ramp up advertising for an array of fulfillment capabilities, including services that let shoppers load products from the curbside, pick up online orders at a store or pay a flat fee to ship a box of consumer staples. The company has also expanded its same-day service through a delivery app it acquired called Shipt, which sends personal shoppers at participating retailers for $99 a year.

To help fulfill the orders at the stores, the company is hiring about 120,000 seasonal workers. Mr. Cornell said Target received more than 100,000 applications at hiring events last week, despite a tighter labor market and Amazon's decision to increase pay to $15 per hour.

Mr. Cornell said the company is still on track to raise its minimum pay to $15 per hour by 2020, though he emphasized other perks. "We are doing more than just wages. We've investing in training. We're investing in development," he said. "It's a combination of those that make Target a great place to work."

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com

(END) Dow Jones Newswires

October 23, 2018 16:44 ET (20:44 GMT)

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