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Will Target’s Latest Move Please Investors?

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Will Target’s Latest Move Please Investors? PART 1 OF 2

Why Target’s Acquisition of Grand Junction Looks Positive

Strengthening digital capabilities

Target (TGT) announced that it has agreed to acquire transportation technology startup Grand Junction, which could help it augment its delivery capabilities and boost its digital business. The financial terms of the deal were not disclosed.

Target is now working with Grand Junction to test same-day delivery at its Tribeca neighborhood store in New York.

Why Target’s Acquisition of Grand Junction Looks Positive

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Founded in 2014, Grand Junction’s technology is used by retailers and third-party logistics providers in North America to manage local deliveries through its network of ~700 carriers. The deal is a strategic fit for Target, as Global Junction’s technology should help it reinvent its supply-chain process and speed up its delivery time.

Why it matters

Target has been witnessing healthy sales trend in its digital arm as consumers shift to online shopping. During the last reported quarter, its comparable digital sales jumped 22%, but its store performance remained sluggish amid increased competition.

To be sure, the convenience of shopping and fast delivery are the key catalysts behind the strong growth of e-commerce companies. Target’s acquisition of Grand Junction is thus seen as a big positive because it should enhance TGT’s speed of delivery through its technology and carrier network.

Target’s supply chain and logistics chief, Arthur Valdez, stated that the acquisition will not only help boost its delivery capabilities but also facilitate consumer-friendly new services like same-day delivery.

Target’s latest move also positions it well among competitors like Wal-Mart Stores (WMT) and Amazon.com (AMZN), which have already upped their games. Walmart has made significant investments into its digital arm, which is driving a healthy top-line growth despite the tough retail environment, and Amazon is expanding into the grocery business through its Whole Foods (WFM) acquisition.

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