Ever since Amazon helped initiate the retail apocalypse, classic stores have been going bankrupt left and right. Many of those that haven’t are still on the verge of collapse. And yet, among the ruthless demise of a dozen retailers, both Target and Walmart managed to not only survive, but adapt and grow. As far as retail was concerned, those two were the only ones managing to compete with Amazon at all, even if they were still behind the e-commerce giant by a significant extent.

But Target just isn’t investing enough in what matters to keep up with Amazon, or even Walmart. Over the past two years, Target has spent $1 billion on its next-day delivery capabilities. That might sound like a lot at first, but it’s chump change for a major retailer, especially over that period of time. Retail analyst Brian McGough puts the startling difference in investment in perspective:

“Over the last two years, Wal-Mart has spent $10 billion. So Wal-Mart is outspending Target by a factor of 10 Amazon spent $12 billion. So you’ve got $22 billion of embedded cost just over a two year time period between Amazon and Wal-Mart in this battle for next day delivery. Target goes ahead and spends $1 billion.”

Looking at these numbers, it’s not hard to see that Target isn’t at all taking the right measures to stack up to its two main competitors in the most important field in commerce right now. Next-day delivery is the end-all be-all of modern retail, and likely future retail. At some point, the ability to deliver an ordered product within 24 hours will be a major determining factor in whether or not a consumer chooses to buy from a certain store.

So what exactly is Target spending most of its money on? At the moment, low-return store remodeling. In an increasingly digital age of online shopping, Target is spending most of its funds remodeling their brick and mortar stores, which are, for the most part, quite nice already. This isn’t to say that brick and mortar stores aren’t important, as they are one of the few advantages Walmart and Target have over Amazon, but since Target already has a strong foothold in that area, they should be focusing more of their resources on the e-commerce sector they haven’t established themselves in very well yet.

“Target is putting a lot of money into the wrong part of PnL and balance sheet – taking operating asset turns down and margins down which is ultimately going to be an earnings hit and multiple depressor.” McGough says.

Between the 3 top dogs, as of 8/8/19, who offers more products for Next-Day Shipping?

  • Target: 17,500
  • Walmart: 200,000, looking to go to 500,000
  • Amazon: 3,000,000, looking to go to 100,000,000