Target Launches a Paid Membership Program To Generate New Revenue

(CTN News) – Taking a page from Amazon and Walmart’s playbooks, Target announced a paid membership program next month.

The Target Circle 360 subscription tier includes unlimited free same-day delivery in as little as one hour and two free days of shipping, as well as other perks. According to Cara Sylvester, Target’s chief guest experience officer, the company is looking at a range of potential benefits to sweeten the membership offer.

Initially, the paid membership tier will cost $49 per year, Sylvester said. It will cost $99 per year after the company’s promotional period ends on May 18. The reduced price of $49 will be available to Target Circle credit card holders.

The retailer will also relaunch its free Target Circle loyalty program, which launched in 2019, in an effort to improve its usability and personalization. The free program, for instance, will automatically apply discounts to members rather than requiring them to scan through deals.

Target’s credit card program will also be rebranded. With the Circle card, customers will receive an additional 5% off their purchases, free two-day shipping on many items, and extended return periods. RedCard was the previous name of the card.

The big-box retailer is relying on the new revenue stream to boost weak sales. In its fiscal fourth-quarter results released Tuesday, the company beat Wall Street’s earnings and revenue expectations, but comparable sales have declined for three consecutive quarters.

With the move, Target follows in the footsteps of retailers that have made membership fees profitable and sales-drivers. The number of people who may subscribe to the paid tier is unknown. According to Target, the free Circle has over 100 million members.

Streaming popular movies and original TV shows is one of the benefits of Amazon Prime, which launched in 2005. Membership costs $139 per year or $14.99 per month, with an $8.99 monthly fee for video membership only.

Amazon does not often share its Prime membership numbers. According to a final letter written by former CEO Jeff Bezos to shareholders, Amazon had over 200 million Prime members worldwide in early 2021.

In 2020, Walmart launched a program called Walmart+. A membership costs $98 a year or $12.95 a month, and includes free shipping, free grocery delivery and gas discounts.

In February, Walmart CEO Doug McMillon said Walmart+ members spend nearly twice as much as nonmembers and buy more over the course of a year as compared to nonmembers.

During the earnings call, Walmart’s CFO, John David Rainey, said that Walmart+ membership continues to grow by double-digit percentages.

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