Target has announced Target Restock, a next day delivery program focused on household essentials. The program is currently piloting with Target employees and will roll out in a broader test in the Minneapolis area this summer.
Target Restock is squarely aimed at taking share back from Amazon. The need for Target Restock to succeed cannot be underestimated.
According to Magid’s Retail Pulse study, 42% of all consumers utilize Amazon Prime, a number that is confirmed by multiple sources tracking Amazon, but what has not been documented as widely, is how severely Target has been impacted by Prime. The Magid Retail Pulse study reveals that over 57% of Target regular customers use Prime (requiring a $99 annual subscription). When looking at Target’s core customer, mom’s aged 27-51, Prime usage climbs to a staggering 68%.
The Target Restock program is focused on household essentials and this focus makes sense for two reasons. Firstly, household essentials is a key trip driver for Target and secondly, is one of the categories where Amazon Prime has made the most in roads with Target’s customer base.
In looking at how Target customers use Amazon Prime by category, and comparing to the rest of the market (see table #1 Below), one can see that apparel, groceries, and small appliances, in addition to household essentials (household supplies), show significantly higher Prime penetration at Target than the rest of market.
Table 1: Percent of Customers That Make Purchases Through Amazon Prime of the Following Product Categories
Target Restock is a great start for Target to regain customers lost to Amazon, but Target may look to expand its efforts within Restock to the category of apparel. Given the strategic importance of apparel to Target’s focus on style and the significant penetration Prime has established (53% within Target customers versus 45% within rest of market) leveraging Restock to recapture customers using Amazon Prime for apparel is a next logical step for an initiative desperately needed at Target.