(Bloomberg) -- Target Corp. is launching a new paid membership program, moving to catch up with rivals whose own subscription plans are well established.
The new program, Target Circle 360, will feature unlimited free same-day delivery for orders over $35 in as little as an hour, along with free two-day shipping on orders from Target.com, the company said Tuesday during presentations to investors in New York. It launches April 7 at a promotional rate of $49 a year through May 18, when it rises to $99 for members without a Target credit or debit card.
Bloomberg previously reported that the company was weighing a paid membership program similar to Amazon Prime or Walmart+ and that it could launch this year.
“We think that’s an offering that our consumers will respond well to,” Michael Fiddelke, Target’s chief operating officer and interim chief financial officer, said in an interview, referring to the $49 starting offer.
Target Circle 360 is the paid tier of an expanded version of the existing Target Circle loyalty program. The company is rebranding its Target RedCard credit and debit cards as Target Circle Card, offering perks such as 5% off purchases. It’s also retaining the free-to-join Target Circle membership.
Target said it would add further benefits to Target Circle 360, such as exclusive partnerships and experiences. The company will seek feedback from customers on what’s most valuable to them as it rolls out the plan and adds benefits, Fiddelke added. He pointed to the “Drive Up” program for curbside pickup as an example: Shopper feedback sparked changes such as adding frozen and refrigerated items, product returns and beverages from Starbucks locations inside the stores.
For Target and other retailers, paid memberships are valuable because they bring in additional revenue and deepen loyalty among its customers. Memberships typically offer users free delivery for digital orders, encouraging people to shop across platforms; consumers who purchase both online and in-person tend to spend more altogether.
Target is a relatively late entrant in the paid membership arena. Amazon.com Inc. launched the $139-a-year Prime in 2005 and has more than 200 million members, while Walmart Inc. started its $98-a-year equivalent in 2020 and has gained an undisclosed number of subscribers with ramped-up marketing. Kroger Co., which began its membership program in 2022, has said it is performing better than expected. Its top tier costs $99 a year.
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Retailers have been offering perks such as free streaming and fuel savings to lure more people to sign up for memberships. Some are offering various price tiers, though it remains to be seen how many programs people will pay for.
Target will have to do something special with its program to fight consumers’ membership fatigue, Bloomberg Intelligence analyst Jennifer Bartashus wrote in a note Tuesday. “Benefits will have to be very differentiated to tempt shoppers to join,” she said.
(Updates to include comments from chief operating officer.)
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