Target on Tuesday said it will launch a paid membership program next month, riffing off the playbook of its rivals Amazon and Walmart.
The subscription tier, Target Circle 360, will include unlimited free same-day delivery for orders over $35 in as little as one hour with no delivery fees and two free-day shipping, along with other perks. The company is looking at a wide range of potential benefits to sweeten the membership offer, said Cara Sylvester, Target’s chief guest experience officer, who announced the program at an investor event Tuesday in New York City.
The paid membership tier will launch in early April and initially cost $49 per year, Sylvester said. It will cost $99 per year after the company’s promotional period, which ends May 18. Customers who have a Target Circle credit card will be able to pay the lower price of $49 per year beyond that.
The retailer will also relaunch its free Target Circle loyalty program, which debuted in 2019, to make it easier to use and more personalized. For example, members who belong to the free program will have discounts automatically applied rather than having to scan through deals on the app, she said.
Target also will rebrand its credit card program. The Circle card will include an extra 5% off customers’ purchases, free two-day shipping on many items and extended time to make returns. The card was previously known as Target RedCard.
The big-box retailer is turning to the new revenue stream as it tries to boost weaker sales. Its fiscal fourth-quarter earnings and revenue reported Tuesday beat Wall Street’s expectations, but its comparable sales have declined three quarters in a row.
With the move, Target is also following in the footsteps of retailers that have turned membership fees into a moneymaker and a sales driver. It is unclear how many people could sign up for the paid tier. The free Target Circle has more than 100 million members, according to the company.
Amazon launched its Prime program in 2005, with perks like free two-day delivery and streaming of popular movies and original TV shows. It costs $139 per year or $14.99 per month, with the video membership-only option of $8.99 per month.
Amazon does not frequently share Prime membership totals. The company had more than 200 million members of Prime across the globe in early 2021, according to a final letter to shareholders written by former CEO Jeff Bezos.
Walmart launched its program, called Walmart+, in 2020. It costs $98 per year or $12.95 per month, with perks like free shipping, free grocery deliveries for orders of at least $35 and gas discounts.
Target is turning to its competitors’ playbook for a reason: Walmart CEO Doug McMillon told investors on the company’s earnings call in February that Walmart+ members spend nearly twice as much as nonmembers and buy more over the course of a year.
Walmart has not said how many people subscribe to Walmart+, but its CFO, John David Rainey, said on the earnings call that its membership continues to grow by double-digit percentages.
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