What: Target goes more fragmented when it comes to logistics, in order to increase speed and flexibility.

Why it is important: Ship from store is also increasingly adopted by department stores, as it maximizes efficiency.

Target has transitioned to using smaller regional warehouses over the past five years. This strategy, adopted by other giants like Amazon and Walmart, helps reduce inventory, trim shipping costs, and expedite deliveries by keeping goods closer to customers.

It represents a shift from centralized mega-warehouses. The benefits include quicker online order fulfillment and faster store replenishment. Such smaller hubs, or "flow centers," using automation, allow for efficient handling of large order volumes.

Target's implementation of this system led to a 17% inventory reduction and improved in-stock rates. Their flow centers in locations like Chicago and New Jersey have cut replenishment times by 20%.

Online orders are packaged at stores and sent to sortation centers for quicker delivery. Target aims to expand this system, planning five more sortation centers by 2026. Amazon and Walmart have adopted similar logistics strategies, focusing on regional distribution and quick deliveries while reducing overall inventory.

Target goes local to speed up order deliveries