Company Trend Analysis - Target Acquires Shipt In Mounting Online Grocery Service Battle - 29 JAN 2018

BMI View: In the increasingly saturated US online grocery segment, differentiation via speed of delivery is key. Target's acquisition of same day delivery provider Shipt is an example of companies reacting to this trend and will enable Target to better compete with rivals Walmart and Amazon, who are also engaging in same-day delivery strategies.

Target is boosting its delivery capabilities by acquiring Alabama-based same-day delivery provider, Shipt, for USD550mn. The move will enable Target to better-position itself in the ongoing same-day delivery wars with Walmart and Amazon. Target has already acquired Grand Junction, through which it offers same-day delivery service in New York. The latest deal with Shipt will enable Target to offer same- day delivery to half of its 1,800 stores by early 2018, and a full roll-out is scheduled by the holiday season in December 2018. Target will offer same-day delivery of groceries, essentials, home electronics and other products, while expanding the offering over time.

Target's recent acquisition of Shipt comes on the back of the company strengthening its strategy to boost its supply chain and digital capabilities to make shopping easier and more convenient. Target has already tapped into consumer's demand for convenience by expanding its ship-from-store options, launching 'Target Restock' and 'Drive Up', and expanding ship-from-store capabilities to more than 1,400 stores nationwide.

Fast Expanding US e-commerce Market
US e-commerce Sales, USDmn
e/f= BMI estimate/ forecast. Source: BMI

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