Target is in the middle of a significant business overhaul as it tries to reverse a prolonged period of uneven performance and give shoppers more reasons to choose its stores.
The company has been working to sharpen its merchandise assortment, improve its shopping experience, and make its operations more competitive as consumers increasingly expect convenience alongside value.
One of the biggest pieces of that effort involves getting merchandise into customers’ hands faster.
Target is investing heavily in same-day and next-day fulfillment, a strategy that reflects how much online shopping habits have changed. But its approach also highlights an interesting difference between two of America’s biggest retailers.
While Target is leaning into faster delivery, Costco has built its business around giving customers compelling reasons to make the trip to a physical warehouse.
The two companies are pursuing very different approaches to winning shoppers, and both have found ways to make their respective strategies work.
Target sees faster fulfillment as a competitive advantage
Target’s second-quarter 2026 earnings call offered evidence that its investments in convenience are gaining traction.
During the quarter, Target fulfilled nearly 30% more same-day and next-day units than it did during the same period last year, executives said. The company also reported digital comparable sales growth of 8.7%, with same-day delivery growing more than 25%.
Those gains are part of a broader effort to improve the retailer’s digital business while making its physical stores more productive.
Target is also investing in inventory reliability and its supply chain. The goal is to make sure products are available where customers need them and get orders to shoppers more quickly.
Target’s Shipt acquisition is central to that strategy. The delivery platform gives the retailer access to an established network of shoppers and delivery infrastructure, helping it compete in a market where consumers increasingly expect online orders to arrive quickly.
“Same-day is becoming table stakes, but it’s about competing with Walmart, not Costco. Shipt has proven to be Target’s best purchase ever,” TheStreet Co-Editor-in-Chief Daniel Kline said.
That distinction matters.
Target isn’t necessarily trying to convince Costco members to abandon warehouse shopping. Instead, it’s competing with retailers like Walmart that have made convenience a central part of their value propositions.
And the opportunity is significant. Target Circle 360, the company’s paid membership program, also benefits from its delivery capabilities, giving shoppers another reason to consolidate purchases with the retailer.
The company reported that Target Circle 360 membership revenue increased more than 40% year over year in the second quarter.
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Costco is betting on the warehouse experience
While Target is trying to get products into consumers’ hands faster, Costco has little reason to make rapid delivery the centerpiece of its business.
The warehouse club has built its reputation around affordable bulk merchandise, quality products, membership perks, and an in-store shopping experience that encourages customers to discover products they weren’t necessarily planning to buy.
That treasure-hunt experience is an important part of Costco’s appeal. Shoppers visit warehouses to find rotating merchandise, seasonal products, food court favorites, and deals that can be difficult to enjoy elsewhere.
The strategy also supports Costco’s membership model. The company wants customers to renew their memberships and visit frequently, giving them reasons to spend more during each warehouse trip.
That doesn’t mean Costco is ignoring digital shopping. The retailer offers same-day delivery through third-party partners, including Instacart, and has invested in improving its website, app, and digital shopping experience.
But those investments largely complement its warehouse business rather than replace it.
Costco CEO Ron Vachris has emphasized that the physical warehouse remains central to the company’s value proposition. The retailer wants technology to improve convenience and member loyalty without losing the experience that differentiates it from competitors.
That approach has helped Costco maintain strong customer loyalty. Its U.S. and Canadian membership renewal rate reached 92.3% in the fourth quarter of 2026, according to the company’s most recent earnings call.
For Target, the challenge is different. It needs to make shopping easier for consumers who increasingly expect to receive purchases quickly, while also improving the merchandise and in-store experience that brings customers through its doors.
Ultimately, Target and Costco are pursuing the same broad objective of building customer loyalty and increasing spending. But their strategies demonstrate that there isn’t just one way to accomplish that.
Target wants to make getting products easier. Costco wants to make visiting its warehouses worthwhile. And for now, both retailers are doubling down on what makes their businesses different.
Maurie Backman owns shares of Target and Costco.
Related: Target copies Costco food court with new in-store snack bar
