Target Plans $100 Million Sortation Center Expansion

Target has announced an expansion of its supply chain planned for the next several years.

The Minneapolis-based retailer plans to invest $100 million to expand next-day delivery capabilities to guests across major U.S. markets by building its supply chain sortation center network to more than 15 facilities by the end of 2026. Currently, Target operates nine sortation centers open across the country in Minnesota, Texas, Colorado, Illinois, Georgia and Pennsylvania.

“Now more than ever, our guests rely on us to deliver their everyday essentials and Target favorites when they want and need them most,” said Gretchen McCarthy, Target’s chief global supply chain & logistics officer. “Through our sortation centers and Target Last Mile Delivery capabilities, we’re able to move faster and with more precision — while controlling costs and expanding our network capacity — for years to come.”

In markets with a sortation center, Target says that packages are retrieved daily from a range of 30 to 40 local stores, depending on the market, and transported to the sortation center to sort, batch and route them for delivery to local neighborhoods by a third-party carrier or Shipt delivery route, depending on the lowest-cost carrier option. By removing the sorting process from the backroom of stores, Target saves time and space for store teams to fulfill additional orders and serve more guests. In January, the retailer opened its newest centers in Chicago and Denver.

“We learned that we had to operate differently,” said Doire Perot, operations director at Target’s Minneapolis sortation center. “This type of building, the type of next-day delivery capabilities that we can offer to our guests and team, it was going to take a different operating model across every team involved. There are three high-level goals that existed on day one and still hold true today: decreasing costs, increasing speed and increasing last-mile capacity. Those three things are going to be the tune for the next several years as we continue bringing that vision to life.” 

In a blog post announcing the supply chain expansion, Target said since Target’s first sortation center opened in 2020, they have seen a 150% increase in the number of orders delivered to guests the next day. Target expects to deliver 50 million packages via sortation centers in 2023, twice the amount it did in 2022.