Target is set to launch a paid membership program called Target Circle 360, joining the ranks of competitors Amazon and Walmart in offering a subscription service. The program, which will begin next month, will cost $99 per year, with a discounted rate of $49 available for new customers who sign up before May 18.

According to Target's statement on Tuesday, subscribers to Target Circle 360 will enjoy a range of benefits. This includes free same-day delivery within one hour for eligible goods through Target's in-house delivery service. Additionally, subscribers will have access to discounted prices and an extended 30-day return policy. For items unavailable through the in-house delivery service, members will receive free two-day shipping for hundreds of thousands of products.

Cara Sylvester, Target's executive vice president and chief guest experience officer, highlighted the company's commitment to building strong relationships with customers. She acknowledged that Target Circle 360 is a reimagination of the existing free subscription service, Target Circle, which has served over 100 million customers since its launch in 2019. The introduction of the paid membership program aims to enhance customer loyalty and increase engagement.

To sweeten the deal, subscribers with Target's branded credit and debit cards will receive an additional 5% discount on any shopping trip, providing further savings for enrolled members.

The announcement of Target Circle 360 marks a strategic move by the company to strengthen its e-commerce presence, which has become increasingly important amid the COVID-19 pandemic. Target invested $100 million last year to improve its e-commerce infrastructure, including expanding its delivery network. By 2026, the company plans to add at least 15 additional warehouses, known as sortation centers, according to Target's statement in February.

During an earnings call, Target CEO Brian Cornell emphasized the significance of the subscription program in driving the company's financial performance. Cornell stated that members of the free Target Circle program visited Target more frequently and spent more compared to non-members. This highlights the potential for the new paid membership service to further catapult Target's sales growth.

While the $99 annual fee for Target Circle 360 is lower than Amazon Prime's cost of $139 per year, it does not come with additional perks like access to Prime Video. Walmart's membership program, which costs $98 per year, offers benefits such as special discounts, same-day delivery, gas price discounts, and other advantages.

Despite a decline in sales of 4.4% over the three months ending in January, Target's performance was better than analysts had anticipated. Digital sales dropped by only 0.7% in the same period, a significant improvement compared to the 6% decline in the previous quarter.

Target's shares saw a positive response, climbing by 2.5% in early trading following the announcement of Target Circle 360. According to Cornell, the paid membership program is a vital component of the company's plan to reverse the decline in sales and return to growth.

"This road map will help us meet consumers where they are," Cornell said, expressing confidence in the company's ability to adapt and cater to customers' evolving needs.

With Target Circle 360, Target aims to provide an enhanced customer experience, continue its digital transformation, and solidify its position in the competitive e-commerce landscape.