Target launches paid membership program as it chases new revenue streams

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 paid membership tier will launch in early April and cost $49 per year, said Cara Sylvester, Target’s chief guest experience officer. She announced the program at an investor event on Tuesday in New York City.

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.

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 money maker and a sales driver. 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.

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 non-members 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.