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Target Planning 4 New Distribution Centers In Major New Logistics Push

Target plans to add 10 new sortation sites and four new distribution facilities.

Target is expanding its warehouse presence in the U.S., with four new centers now in the works as part of a multibillion-dollar capital spending program.

The retailer, which saw its annual sales soar to over $100B last year, is also adding a new network of 10 sortation sites with the aim of making products move faster through its supply chain, The Wall Street Journal reports. Shipt Inc., the last-mile delivery startup that Target bought in 2017, will work alongside the sortation sites to provide fast online order fulfillment.

“Before last year, we hadn’t added a new regional distribution center in over a decade, even as our total sales grew 40% over that same time period,” CEO John Mulligan said this week during the company’s earnings call. “It’s time to expand our network."

Target is set to deploy $4B to $5B in capital spending annually for the next few years, a 40% jump from last year. In the United States, there are almost 2,000 Target stores and 49 distribution centers. Between 2011 and 2020, it built no new warehouses, but it added two new centers last summer in New Jersey and Chicago.

It is not clear where the new distribution centers will be, but Target is running the first of the sortation centers in Minneapolis. Last May, the company said it would add five new sortation centers by the end of 2021.

Target's move to add distribution space comes at a time of record-breaking demand and a lack of supply in the U.S. industrial market, fueled in large by part by Target's main competitors, Amazon and Walmart. Amazon leases more than 280M SF of warehouses across the country.

In terms of its physical stores, Target has been pursuing smaller concept offerings for the last few years, signing deals for smaller locations in dense areas like New York City. Last year, it announced that alcohol will now be among the items that can be ordered for curbside pickup in 1,200 U.S. stores and for same-day delivery from 600 U.S. stores.