Target recently opened a sortation center in Detroit, the company's 11th sortation facility. In 2023, Target announced a $100 million investment to build at least 15 sortation facilities by 2026, with the goal of expanding its next-day delivery capabilities.
Sortation centers are where orders shipped from Target stores are sorted, batched, and routed to consumers by third-party delivery partner Shipt, reports the publication Retail Brew. The sortation facilities operate downstream of stores, in keeping with Target’s “stores as hubs” strategy, which uses brick-and-mortar stores to fulfill delivery orders. Stores currently fulfill “more than 96% of total sales,” according to the company’s website.
“By removing the sorting and packing process from our store backrooms, we save valuable time and space for our store teams to fulfill additional orders and serve guests,” the company said in a fact sheet. “And because our sortation center technology presorts and arranges packages for easy pickup, it reduces processing time for our delivery partners.”
Target said sortation centers have increased the number of next-day deliveries by more than 150%.
COO and CFO Michael Fiddelke told shareholders recently that these facilities “processed 19% more packages than a year ago,” and that their deliveries arrived more than a day faster than the company’s network average, at 20% lower cost. He added that the new facility in Detroit will serve more than 3 million customers and process up to 60,000 packages a day by 2028.
He also hinted that soon, sortation centers will be shipping products between themselves: “Our recently opened sort center in Chicago will be feeding the Detroit sortation center, increasing the number of packages eligible for next-day delivery in that market.”