Target’s delivery operations evolve with improved capacity, loading speeds

Leaning more on high-capacity vehicles is just one way Target's last mile delivery operations are evolving to more closely mirror parcel carriers' processes.

The retailer is also working on "a standardized, faster way to load those vans, enabling package containerization and easy identification of the correct packages at delivery," Mulligan said. This both simplifies the loading process for drivers and allows the company to safely move more Shipt drivers in and out of its sortation centers, boosting last mile delivery capacity.

These initiatives will help the company handle the growing number of packages flowing through its sortation centers in a more cost-effective manner. The company delivered 26 million packages via these centers in 2022, and it aims to roughly double that amount this year.

The opening of new sortation centers should also boost volumes. In February, the company announced a $100-million investment to expand its next-day delivery capabilities by adding more sortation centers. The company has nine of these centers today, Mulligan said on the May 17 call, and that number is expected to climb to more than 15 in 2026.

Target is working to maximize the next-day delivery capabilities of its sortation centers. It opened an "extension facility" this month in Smyrna, Georgia, that expands the company's reach in the Atlanta market, Mulligan said.

Online orders that fall outside of Target's Atlanta sortation center can be transferred to the Smyrna facility, Mulligan said. Drivers can pick up those orders in Smryna and deliver them to additional neighborhoods.

"With the opening of this extension facility, our next day delivery capability is now reaching more than 3 million guests in the Atlanta market," Mulligan said.