At 10:30 a.m. one recent morning, a few dozen cars drove into the garage at Target’s sorting center in northeast Minneapolis and a countdown began.
Drivers scanned, then waited for the boxes to be carried into each vehicle. With the 30-minute countdown, some drivers lay on the ground to put the boxes away, then stuffed them into trunks and seats. The scene repeats more than a dozen times a day as Target tries to get orders through faster and cheaper.
“If you’re closer to the guest, you reduce shipping costs,” Target COO John Mulligan said in an interview. “And now we’re taking this to its next evolution and it’s the sorting center where we can sort on a more granular level.”
For years, Target has relied on employees at its 1,900 stores to fulfill the orders it receives on its website and apps. But in October 2020, after digital orders soared during the height of the pandemic shutdowns, the company opened this sorting center to test a new way of operating. With this, the company found it could reduce its average unit cost to run by almost a third.
Now Target has six sorting centers across the country. And he announced three more this week, two in Chicago and one in Denver. The company also gave its first behind-the-scenes look at the Minneapolis Sorting Center.
Digital orders account for 18% of Target’s overall sales. And more than 95% of Target’s digital orders are still fulfilled by employees in stores. But the use of sorting centers will change that.
Initially, the Minneapolis sorting center only served 12 subway stores and delivered 600 packages a day. Now it manages orders and goods from 43 stores and has the capacity to deliver 50,000 parcels a day.
Packages arrive on pallets from stores and are placed on belts where employees search for a code to determine how far they should go. Packages traveling a short distance are delivered overnight and delivered by drivers from Shipt, the delivery service owned by Target. Those going further afield will be delivered by a third-party carrier, such as the post office.
Ship operators use their own vehicles and are allowed to see their routes before agreeing to use them. Shipt’s driver, Lloyd Abrahams, normally takes three or four trips a working day.
“It gives me the freedom to choose the routes,” Abrahams said.
Target’s sorting center continues to evolve. The company is testing different configurations of its pickup garage. In recent weeks, Target also began testing its first commercial van for a Shipt driver, which would replace their own personal vehicle. The vans can hold up to eight times more packages than the rear seats upholstered to the ceiling.
It is also likely that in the future more automation could be added to sorting facilities to make them more productive.
Store managers say the sorting center model saves their employees time and space in their back rooms, which fill up during holidays and the start of new seasons.
For example, employees at the Target store in Edina had to get creative to stock enough merchandise for shoppers visiting the store and those nearby looking for delivery or pickup.
Popular products for online pickup – like food, health and beauty, cleaning products and paper goods – are now picked from the back office before workers search for them in the store. Last summer, Edina’s store added a cold room to handle an increase in fresh food orders.
Space in the receiving area has also been better utilized because, instead of workers having to sort packages for each carrier to pick them up and deliver to the store, that work is done at the Minneapolis sorting center.
Targeted employees at the Edina site only need to pick the products from the backroom or store shelves, optionally prepare them by wrapping them in plastic, then wrap them to go to the center for sorting .
Target, which reported that it was facing an unusually large inventory backlog, also tried to save space in its back offices by storing some of its overflow inventory in rented space near ports and distribution centers.