Target is rolling out a new service from Starbucks — curbside delivery.
Minneapolis-based Target
TGT
Target reported first quarter GAAP earnings per share of $2.05, down 4.8 percent from $2.16 in 2022. First quarter adjusted EPS of $2.05 decreased 6.2 percent compared with $2.19 in 2022.
Inflation and shrink (theft) will reduce Target’s profitibility by $500 million this year, the retailer said, adding that with a Drive Up order, guests can add a Starbucks
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The nationwide launch follows a successful pilot, which applied Target’s test-and-learn approach to enhance guest and team member experiences. Target continues to differentiate its same-day shopping experience with enhancements such as Starbucks curbside pickup.
The way it works: guests with a Drive Up order add a Starbucks
SBUX
“Starbucks has a long history of adapting and innovating how we serve our customers, meeting them where they are,” said Mark Ring, senior vice president, U.S. licensed stores, Starbucks Canada and Siren Retail. “Offering the Starbucks experience to Target Drive Up guests is a great example of two iconic brands creating a joyful moment in a way that Starbucks and Target are uniquely positioned to do together.”
The ability to add a Starbucks menu item to a Drive Up order was the single most-requested feature by Target guests. Target worked with Starbucks to develop the experience and then piloted the Drive Up with Starbucks service in 2022 and 2023 with the help of team members at select stores.
Throughout the pilot phase, Target’s store teams tested the process to make sure it was efficient and easy for team members — and enjoyable for guests. True to its test-and-learn approach, Target continues to fine-tune the experience, which is starting its chainwide rollout this summer, and is slated to be available at all the 1,700-plus stores with Starbucks Cafés and Drive Up service by October.
The Drive Up by Starbucks national rollout comes on the heels of another recent enhancement to the Drive Up service, including the ability to make a product return free of charge. Returns with Drive Up launched at Target stores across the U.S. this summer.
Speaking about the Q1 results, Brian Cornell, chairman and CEO of Target Corporation, said at the time, “We came into the year clear-eyed about the challenges consumers are facing, and we were determined to build on the trust we’ve established with our guests.
“It’s required agility and the ability to flex across our multi-category portfolio as we lean into value and the product categories our guests need most right now,” Cornell added. “Thanks to the team’s dedication, we saw an increase in guest traffic in Q1, with total sales increasing and profitability ahead of expectations.
“Our guests have long told us Drive Up is a game-changer, adding convenience to their daily life, especially when they’re short on time,” said Mark Schindele, chief stores officer of Target. “We’ve continued listening to our guests, who’ve told us overwhelmingly that Drive Up with Starbucks would bring even more ease and joy to every Target run. This one-of-a-kind service — available only at Target — is the latest example of how we’re innovating every day to meet the needs of our guests.”
Following a successful pilot, the nationwide rollout of Drive Up with Starbucks gives guests everywhere the ability to enjoy handcrafted beverages or food while they pick up their Drive Up order. Target is the first retailer to offer this service at this scale. Drive Up with Starbucks highlights Target’s continued investment in its same-day shopping experience, delivering what guests need and crave quickly and easily.
After a guest places a Drive Up order at a participating Target store and receives notification that it’s ready for pick up, the consumer indicates they are on the way in the Target app.
The consumer then receives a prompt in the app to place a beverage or food order from the Starbucks menu. After making their Starbucks selection, they click “Add for Drive Up” and pay for the order.
Guests park in the Drive Up parking area and tap “I’m here” in the Target app. A Target team member then delivers the freshly prepared Starbucks order — along with the guest’s Drive Up purchase — to their car for free.
The ability to add a Starbucks menu item to a Drive Up order was Target guests’ most-requested feature. Target worked with Starbucks in the development of the experience and then piloted the Drive Up with Starbucks service in 2022 and 2023 with the help of team members at select stores.
Throughout the pilot phase, Target’s store teams tested the process to make sure it was efficient and easy for team members — and enjoyable for guests. True to its test-and-learn approach, Target continues to fine-tune the experience.
The Drive Up with Starbucks national rollout comes on the heels of another recent enhancement to the Drive Up service: the ability to make a product return free of charge. Returns with Drive Up launched at Target stores across the U.S. this summer.
Target, which faces intense competition in the retail space from Walmart
WMT
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Based on softening sales trends in the first quarter, the company is planning for a wide range of sales outcomes in the second quarter, centered around a low-single digit decline in comparable sales. GAAP EPS and Adjusted EPS are both expected to range from $1.30 to $1.70.
For the full year, the company is maintaining its prior guidance, which includes expected comparable sales in a wide range from a low-single digit decline to a low-single digit increase, operating income growth of more than $1 billion, and both GAAP EPS and Adjusted EPS of $7.75 to $8.75.
“If your target demographic is a consumer looking for a bit more premium quality, but also a good deal on home essentials, like the Target consumer, Starbucks ties really nicely into that,” said Robert Carter, executive director of food and fashion trends at NPD Group, a market research company. “They’re looking for a quality experience as well as deal-finding.”
Source: https://www.forbes.com/sites/sharonedelson/2023/08/09/target-launches-curbside-pickup-for-starbucks-orders/