Target’s Drive Up service has a latte going for it

The following article was previously published on Forbes.com.

Target’s Drive Up service has been the star of the retailer’s same-day services growth. It’s likely to get an espresso-strength shot of momentum soon as Target rolls out a new service where customers add drinks and food from Starbucks to their Drive Up orders and have them walked out to their vehicles.

The retailer said the Starbucks service will be available at more than 1,700 stores by October. Target said it is the first retailer to make an offer like this available at scale. The chain has not provided sales figures at test stores used to provide proof of concept for the Starbucks Drive Up option.

“We’ve continued listening to our guests, who’ve told us overwhelmingly that Drive Up with Starbucks would bring even more ease and joy to every Target run,” said?Mark Schindele, chief stores officer, Target, said in a statement. “This one-of-a-kind service — available only at Target — is the latest example of how we’re innovating every day to meet the needs of our guests.”

The new Starbucks Drive Up service continues Target’s strategy to be known as the easiest place to shop in the U.S. The retailer rolled out product returns using its Drive Up service. Target customers can return unwanted purchases at no charge at nearly 2,000 locations.

The chain has made Drive Up a focus of its same-day services. Drive Up has continued to grow even as Target’s digital sales activity has softened. Target reported that its first-quarter comparable digital sales fell 3.4% year-over-year. The chain’s same-day digital services increased more than 5% during the quarter, with Drive Up posting gains in the high single digits.

The availability of Drive Up and in-store pickup has enabled Target to reduce the average unit cost of fulfillment by 40% over the past four years.

These same-day services have also increased Target’s Net Promoter Scores (NPS), leading customers to visit more often and spend more with the chain. Those who shop using Drive Up for the first time have been shown to increase their purchases from the retailer by more than 20%.

Target COO John Mulligan told analysts on the chain’s fourth-quarter 2022 earnings call that Drive Up customers' two biggest questions at the time were, “Why can't I get a Starbucks and why can't I return something?” Check and check.