Dive Brief:

• Target on Wednesday announced that it is rolling out an option for shoppers to add a Starbucks order and make returns through its Drive Up service, according to a company announcement. Pickup time windows and membership fees are not required.
• These services will debut in select cities in the fall, with more locations added in 2022. The retailer also expanded its "backup item" function, where shoppers can designate secondary item substitutions for Drive Up and Order Pickup.
• Customers can indicate they are on their way to a Target location through the retailer's app and will then have an option to place an order from the Starbucks menu. Shoppers will also be able to initiate a return through the app and complete it at a store's Drive Up lane.

Dive Insight:

Soon select Target shoppers will be able to order a latte and return a jacket that didn't quite fit — all without getting out of their car. 

The ability to add Starbucks to Drive Up orders was a top request in a survey of Target shoppers, the company said. 

The retailer launched its Drive Up service through a pilot program in the fall of 2017 and quickly expanded it the following year. Drive Up, which is a contactless way to order and obtain items while remaining in a vehicle, is one way the retailer steadily invested in its fulfillment operations over the years.

Those and other fulfillment services then exploded in popularity during the early days of the pandemic. In the second quarter of 2020, the retailer saw comps for Pick Up, Drive Up and Shipt grow 273%.

During the company's last earnings call with analysts in November regarding its Q3 2021 results, Chief Operating Officer John Mulligan said that Target added thousands of items to the available list for pickup and doubled the number of Drive Up parking stalls in one year. The company also designated stall numbers to help workers deliver orders more efficiently.

The work paid off. Since 2019, sales through Drive Up expanded over 10 times to around $1.4 billion in the third quarter alone, according to Chief Financial Officer Michael Fiddelke. In Q3 Drive Up grew more than 80%, "on top of more than 500% a year ago," Fiddelke said.

"Ongoing investments in our same-day services have built trust and relevance with our guests, while meeting their needs — no matter how they choose to shop," Mark Schindele, Target's chief stores officer, said in a statement regarding the company's latest announcement.

Target added new features to its same-day services this past holiday season, including the ability to add backup grocery items in case a customer's first choice is out of stock, and the capability to pick a specific Target location for Shipt Shoppers. A "shopping partner" feature allows customers to send someone else to pick up their order, while "forgot something" allows for product add-ons after a Drive Up or Order Pickup has been placed.

As part of its increased capabilities, Target also is expanding its "backup item" options to a wider assortment of categories, including household and beauty products. The company said that it has successfully substituted backup items 98% of the time in the months since the option rolled out for food and beverage orders.

"Our guests continue to tell us they love the ease and convenience of Drive Up, and they have been asking us to add even more of the Target experience to the service," Schindele said. "Adding a Starbucks order and easy returns, while expanding our backup item options, will give guests even more of what they love about shopping at Target, quickly and easily."