Red Target shopping bag with text: 'Target Launches New Membership Program'.

Target Corp. is launching a new paid membership program. The program, called Target Circle 360, was created in a bid to boost growth. It will also stand toe-to-toe with larger competitors such as Amazon Prime and Walmart+, according to sources familiar with the matter.

Target 360, which will debut next month, aims to expand upon Target’s existing free membership loyalty program, Target Circle, by offering additional perks and benefits in exchange for a fee. One of the perks will include unlimited same-day delivery on orders over $35. Another perk will be free two-day shipping on items that are not available locally. These deliveries will be handled by Shipt, the independent delivery contractor that Target obtained in 2017. These perks and more will be available for an annual $99 fee. However, those who sign on early, or who already have a Target credit card, will get a reduced rate of $49 per year.

The news is crucial for the Minneapolis-based retailer. It’s been struggling with declining sales amid reduced consumer spending. Target has also weathered controversy, including a backlash over its handling of Pride Month merchandise last year.

Despite these challenges, Target’s shares saw an increase on Wednesday morning in New York. Over the past year, the stock declined by 18%. In contrast, the broader S&P 500 Index gained 20%.

Target 360 will be entering the paid membership program arena relatively late compared to its rivals. However, such a move will create a new revenue stream and build stronger customer loyalty. Membership programs usually offer benefits like free delivery for online orders. This encourages customers to shop across both digital and physical platforms.

Many of Target’s competitors have long-established membership programs. Amazon’s Prime program, with over 200 million members, started in 2005. Walmart introduced Walmart+ in 2020 and saw subscriber growth through aggressive marketing efforts. Kroger’s Boost paid membership program, launched in 2022, has also exceeded expectations.

To remain competitive, Target 360 may need to emulate strategies employed by Walmart and Kroger, such as offering perks like gas savings to entice subscribers. However, the success of Target’s membership program hinges on consumer willingness to pay for yet another retail subscription service. As of now, neither Walmart nor Kroger publicly disclose their subscriber counts, leaving room for speculation on the effectiveness of their respective programs.