Target Corporation (TGT): Business Model Canvas [Dec-2025 Updated]

You're digging into how the big red bullseye keeps winning in this tough retail climate, and honestly, the Business Model Canvas for Target Corporation shows a masterclass in blending style and accessibility. With fiscal year 2025 revenue hitting $106.57 billion and a gross margin of 28.21%, their engine runs on nearly 2,000 US stores acting as fulfillment hubs, a loyal base of over 100 million Target Circle members, and high-margin exclusives like Ulta Beauty shop-in-shops. This model isn't just about selling stuff; it's about using data-driven personalization and premium services like the new Circle 360 membership to lock in that value-seeking, style-conscious shopper. Let's break down the nine blocks that make this machine hum.

Target Corporation (TGT) - Canvas Business Model: Key Partnerships

You're looking at how Target Corporation structures its external relationships to deliver value, which is critical given the competitive landscape as of late 2025. These alliances aren't just nice-to-haves; they directly impact fulfillment speed and product differentiation.

The core of Target Corporation's partnership strategy involves integrating specialized services and exclusive retail experiences directly into its nearly 2,000 stores across the U.S.. Here's a breakdown of the key players driving this strategy.

The focus on exclusive merchandise through these brand alignments is a key lever for driving traffic back into stores, especially as Target navigates a challenging consumer spending environment.

Regarding the owned brands, the supply chain relationship with global manufacturers is actively shifting to mitigate risk and control costs. Here are the specifics on sourcing:

• Target reduced the number of its store-label products sourced from China to 30% as of late 2025.
• This represents a significant reduction from the 60% sourcing level reported in 2017.
• The company has a stated goal to reduce China sourcing for these products further to 25% by the end of 2026.

The CVS Health arrangement is a legacy deal that continues to provide a health and wellness anchor within the retail footprint. The initial acquisition price was $1.9 billion.

For fulfillment, the growth in same-day delivery is a bright spot, showing a 35% increase in the last reported quarter, even as in-store comparable sales declined by 5.7% in Q2 2025. That digital momentum is directly tied to the Shipt infrastructure.

The Marriott Bonvoy integration is a new layer aimed at boosting the premium tier of the loyalty program, Target Circle 360. The goal is to triple the membership base of Target Circle 360 over the next three years.

Finance: draft the Q3 2025 impact analysis of the Marriott Bonvoy perk launch by next Tuesday.

Target Corporation (TGT) - Canvas Business Model: Key Activities

You're looking at the core actions Target Corporation takes to deliver value, which is a mix of physical retail muscle and digital acceleration. Here's the breakdown of what they are actively doing, grounded in the latest figures.

Developing and Marketing Owned Brands

Target Corporation focuses heavily on its exclusive merchandise. This activity builds differentiation and margin potential.

For example, the company introduced the floral brand Good Little Garden in April 2025 and refreshed the pet supplies under Boots & Barkley.

Operating and Remodeling Physical Stores

The physical footprint remains central, serving as both a sales channel and a fulfillment hub. They are actively investing in modernizing this fleet.

The company is executing its largest floor pad redesign in a decade to create more inspiring spaces in key categories.

Enhancing Omnichannel Fulfillment

Speed and reliability in order fulfillment are key operational focuses, leveraging the store base.

• Same-Day Delivery growth in Q2 2025: more than 35% or more than 25% powered by Target Circle 360.
• Ship-to-guest growth in Q2 2025: >7%.
• Same-day services growth in Q2 2025: 3%.
• Target Circle 360 membership growth goal: triple the base over the next three years.

Target is scaling a model that reallocates digital order volumes across stores based on capacity to improve speed.

Capital Investment in Supply Chain and Technology

Significant capital is being deployed to support the physical and digital infrastructure.

The planned capital expenditure for fiscal 2025 is approximately $4 billion, covering new stores, remodels, and supply chain/technology enhancements. This is set to increase to approximately $5 billion in fiscal 2026.

Using AI-Powered Tools

Technology investment includes deploying advanced tools for operational efficiency and customer engagement.

• New GenAI licenses being invested in: more than 10,000+.
• In-stock rate improvement from machine-learning forecasting (for top 5,000 items): more than 150 basis points.
• Target Trend Brain and synthetic audiences are used to identify trends faster.

These tools help teams make more precise product decisions, honestly. Finance: draft 13-week cash view by Friday.

Target Corporation (TGT) - Canvas Business Model: Key Resources

You're looking at the core assets that let Target Corporation compete day in and day out. These aren't just line items on a balance sheet; they are the engines driving customer traffic and fulfillment capability. Honestly, the physical footprint combined with the digital ecosystem is what makes their model tick.

Extensive network of nearly 2,000 US stores for sales and fulfillment

The physical store base remains a massive, tangible resource. As of late 2025, Target operates 1,981 stores across 51 states and territories in the United States. This network is not static; the company is actively investing in expanding this footprint, planning to open around 20 new locations throughout 2025 as part of a decade-long plan to add over 300 stores. This physical presence powers the stores-as-hubs fulfillment model, which is key to their omnichannel strategy.

Target Circle loyalty program with over 100 million members

The loyalty structure is a critical data and engagement asset. The free Target Circle program has grown to boast more than 100 million members. This base is layered, with the paid Target Circle 360 tier driving significant value. For instance, in 2024 alone, the loyalty programs added 13 million new members. The financial impact of loyalty is clear: in 2024, Target Circle members spent, on average, three times more than non-members, and those paying for Circle 360 spent about eight times more. That's a powerful incentive to keep customers engaged.

Strong portfolio of exclusive owned brands (e.g., Good & Gather)

The in-house brands are central to differentiation and margin control. Target's portfolio of owned brands reached a valuation of $31 billion by the second quarter of fiscal 2025. This strength is anchored by 10 specific owned brands that each generate annual sales exceeding $1 billion. These labels allow Target flexibility to introduce newness and maintain a blend of style and affordability that competitors find hard to replicate.

Shipt's last-mile delivery network and logistics

Shipt is the dedicated logistics arm supporting the digital promise. While specific 2025 shopper or order volume metrics aren't immediately available, the integration with the premium loyalty tier is quantified. Target Circle 360 members gain access to the Shipt Marketplace, which provides same-day delivery from over 100 local grocers and specialty retailers nationwide. This capability extends Target's fulfillment reach beyond its own four walls.

Brand equity and reputation for affordable, on-trend merchandise

The Target brand itself is a valuable intangible asset, built over decades. Brand Finance has tracked the value of the Target brand 19 times between 2007 and 2025, indicating continuous monitoring of this equity. This reputation is what attracts the median target customer, often described as belonging to medium to high-income group families. The company's focus on design-led, trend-driven products, like the FUN 101 initiative in Hardlines during Q2 2025, reinforces this positioning.

Here's a quick look at the hard numbers underpinning these resources:

The company's ability to leverage its physical space for digital fulfillment-using stores to power more efficient operations-is a direct function of having nearly 2,000 locations. This stores-as-hubs approach is a resource multiplier.

The paid membership, Target Circle 360, costs $99.99 annually or $10.99 per month, though discounts are available. That's a clear financial commitment from the most engaged segment of the 100 million+ member base.

Finance: review the capital expenditure allocation between new store builds and supply chain technology upgrades for Q4 2025 by next Tuesday.

Target Corporation (TGT) - Canvas Business Model: Value Propositions

Curated, on-trend merchandise (cheap chic) at great value.

Target Corporation delivers trend-right assortments, often ahead of the curve, balancing style with accessible pricing. This is supported by specific holiday value commitments and category momentum.

• Holiday 2025 commitment: Over 20,000 new items, with more than half exclusive to Target.
• Holiday 2025 value example: Thanksgiving meals for 4 under $20.
• Holiday 2025 value example: Turkey priced at just 79 cents per pound.
• Holiday 2025 value example: Thousands of trend-right gifts starting at $5.
• Holiday 2025 value example: Thousands of toys under $20.
• Q3 2025 performance showed momentum in Hardlines and Food & Beverage categories.
• Q3 2025 Toys category growth was nearly 10%.
• Q3 2025 Beverages category growth was up 7%.

Extreme convenience via same-day fulfillment options.

Target Corporation leverages its physical footprint as fulfillment hubs to offer rapid delivery, with the Target Circle 360 program being a key accelerator for same-day services.

• Same-day delivery growth powered by Target Circle 360 in Q3 2025 was more than 35%.
• Next-day delivery is now available to over half of the U.S. population.
• The market fulfillment strategy rolled out to 35 additional markets in Q3 2025.
• In the prior fiscal year (ended Feb 2025), over 65% of digital sales were fulfilled through same-day options.
• Same-day services saw a surge of more than 25% in Q2 2025.

One-stop-shop for essentials, groceries, and discretionary items.

The retailer maintains a broad assortment across nearly 2,000 stores in the U.S., ensuring that more than +75% of the U.S. population lives within 10 miles of a location, supporting both staple and discovery purchases.

• Number of U.S. stores as of 2025: Nearly 2,000.
• Percentage of U.S. population within 10 miles of a store: +75%.
• Q3 2025 Non-merchandise sales grew nearly 18%.
• Target Plus digital marketplace GMV grew nearly 50% in Q3 2025.

Exclusive, high-quality owned brands unavailable elsewhere.

Target Corporation offers differentiation through its portfolio of owned brands and exclusive partnerships, which are central to its design-led merchandising authority.

• Target operates 45+ owned brands unique to the retailer.
• The company plans to grow its Target Plus third-party digital sales from approximately $1 billion in 2024 to more than $5 billion by 2030.
• The Q1 2025 limited-time partnership with kate spade was noted as the strongest designer collaboration in the last decade.
• Holiday 2025 assortment includes over 20,000 new items, with more than half exclusive.

Rewarding loyalty through the Target Circle program benefits.

The Target Circle ecosystem, including the free and paid tiers, drives significant engagement and spend from its members.

• Target Circle and Circle 360 added 13 million new members in 2024.
• Target Circle members spent three times more on average than non-members in 2024.
• Target Circle 360 members spent an average of eight times more and shopped six times more frequently in 2024.
• Target plans to triple the Target Circle 360 membership base over the next three years (as of March 2025).
• Roundel, the in-house media company, drove nearly $2 billion in value in 2024 and plans to double in size by 2030.

Target Corporation (TGT) - Canvas Business Model: Customer Relationships

Automated, data-driven personalization via Target Circle.

The free Target Circle loyalty program had over 100 million members as of February 2025. In 2024, 13 million new members joined Target Circle and Circle 360 combined. Target Circle members spent, on average, three times more than non-members in 2024. For those using a Target Circle credit, debit, or preloaded card, the average spend was about six times more. The enhancements to the loyalty program drove a 9% increase in digital sales during the 2024 holiday quarter. In the third quarter of 2025, traffic increased by 3% year-over-year.

Self-service options like Drive Up and in-app ordering.

Almost all of Target Corporation's nearly 2,000 stores across the country offer same-day Order Pickup and Drive Up services, which are always free. Same-day delivery powered by Target Circle 360 grew by 25% year-over-year in the fourth quarter of 2024. In the second quarter of 2025, growth in same-day delivery and Drive Up services was more than 25%. Target fulfilled almost 80% of all online orders within one day using these same-day services. Of those same-day deliveries, about 80% arrived to guests in three hours or less. By the end of October 2025, next-day delivery was expanded to 35 top U.S. metro areas.

Dedicated, paid Target Circle 360 membership for premium benefits.

Target Corporation aims to triple its Target Circle 360 membership base over the next three years. In the first quarter of 2025, year-over-year growth in same-day delivery powered by Target Circle 360 was up 35%. Members who paid for Target Circle 360 spent an average of eight times more and shopped six times more frequently in 2024 compared to non-members. As of May 2025, members gained access to same-day delivery with no price markups from more than 100 retailers via the Shipt network.

In-store team members providing elevated guest service.

The overall customer satisfaction rating for Target Corporation is 80%, based on the American Customer Satisfaction Index (ACSI) data. Furthermore, 83% of customers consider themselves loyal. Target Corporation operated 1,978 stores in the United States as of February 2025. The company has 450,000 employees. Target began accepting applications for seasonal positions in all 50 states starting September 24, 2025. Target plans to invest about $4 billion in 2025 to support store remodels and supply chain enhancements.

Target Corporation (TGT) - Canvas Business Model: Channels

You're looking at how Target Corporation gets its products and services into the hands of its guests, which is a complex mix of physical presence and digital speed as of late 2025. It's not just about the store anymore; it's about the entire fulfillment ecosystem.

Nearly 2,000 physical retail stores across the US

The foundation of Target Corporation's channel strategy remains its vast physical footprint. As of 2025, Target operates 1,989 stores across the United States. This network is critical not only for in-person shopping but also as the backbone for its rapid fulfillment options, acting as mini fulfillment centers. In 2024, Target opened 23 new full-size stores, continuing its commitment to enhancing this physical presence.

Target.com and the Target App for digital commerce

The digital channels-Target.com and the Target App-are deeply integrated with the physical stores. Digital sales account for about 20% of Target Corporation's total volume as of early 2025. The performance across the first three quarters of fiscal 2025 shows consistent digital engagement, even as overall comparable sales fluctuated.

Here are the comparable digital sales growth figures for the first three quarters of fiscal 2025:

Same-Day Services: Drive Up, Order Pickup, and Shipt delivery

Speed and convenience through same-day services are major differentiators. Target Corporation fulfilled almost 80% of all online orders within one day via these services in the last reported quarter. Almost all of the nearly 2,000 stores offer both Order Pickup and Drive Up, which are always free.

The growth in same-day delivery, powered by Target Circle 360, has been particularly strong:

• Same-day delivery grew over 35% in Q1 2025.
• Same-day delivery grew over 25% in Q2 2025.
• Same-day delivery grew over 35% in Q3 2025.
• Same-day delivery is available to approximately 80% of the US population.

Furthermore, Target Corporation expanded its next-day delivery service to 35 top U.S. metro areas by the end of October 2025. For orders over $35, next-day delivery is free, as it is for Target Circle 360 members.

Roundel media company for vendor advertising placements

Roundel, Target Corporation's retail media business, is a significant non-merchandise revenue driver. As of July 2025, Roundel generates nearly $2 billion of value for Target. This value includes ad revenue within topline net sales and contributions that offset cost of sales and SG&A expenses. Non-merchandise sales, which include Roundel, saw nearly 18% growth in Q3 2025. Roundel works with over 2,000 vendors.

For context on its growth trajectory, in 2024, the advertising revenue for Target's ad business was $649 million, marking a 25% increase from 2023's $522 million.

Key Roundel metrics:

• $2 billion in value generated (as of July 2025).
• 24% year-over-year revenue increase in 2024.
• Target Product Ads (TPAs) saw over 35% sales growth in 2024.
• Double-digit growth reported in Q3 2025.

Finance: review the Q4 2025 forecast for non-merchandise sales growth by end of week.

Target Corporation (TGT) - Canvas Business Model: Customer Segments

You're analyzing the core of Target Corporation's business, which is deeply rooted in its broad and segmented customer base. Honestly, the sheer reach is impressive, but the real story is how they segment that reach to drive loyalty and spend.

Target Corporation captures a broad US consumer base. The data shows that 80% of U.S. shoppers, which translates to about eight in ten Americans, shop at Target at least once a year. Operationally, Target serves this base through nearly 2,000 stores in the United States, with about 75% of U.S. consumers living within 10 miles of a location. The weekly traffic count is substantial, with over 30 million customers shopping in their stores weekly.

The primary focus leans heavily toward families, which is supported by the fact that a notable 43% of Target customers are parents. This segment is often characterized by seeking a balance between cost and quality, which Target frames as offering 'beautiful things at an affordable price.' The median household income for Target shoppers is reported at $64,000, indicating a strong pull toward the middle-income demographic, though the base is wide.

The appeal to value-seeking shoppers who also desire style and quality is central to the brand's positioning. Target is known for its focus on upscale, trend-forward merchandise at lower costs. The strategy involves bringing consumers an on-trend and affordable assortment packed with style, newness and value. This is where the segmentation of income becomes interesting, as it shows a blend of price sensitivity and desire for curated goods.

The most loyal segment is captured by the Target Circle members. The free loyalty program has over 100 million members. These members are significantly more valuable; the program has more than 100 million members who shop and spend more than five times more than non-members. The paid tier, Target Circle 360, is designed to deepen this loyalty, with same-day delivery services powered by it seeing over 25% growth in Q2 2025.

Here's a quick look at the income profile that defines the value-seeking aspect of the customer base:

You can also see the age distribution that informs how Target tailors its product mix:

• Age 25-34: 29.56% of shoppers
• Age 35-44: 20.16% of shoppers
• Median Age: 40 years old
• Customers with College Education: 57%

Target Corporation (TGT) - Canvas Business Model: Cost Structure

You're looking at the expense side of Target Corporation's business, which is where the rubber meets the road for retail profitability. For a company this size, the cost structure is dominated by the things you can touch-the product itself and the people selling it.

Cost of Goods Sold (COGS) and Gross Margin

The single largest cost component is, without question, the Cost of Goods Sold (COGS). This is what Target pays its suppliers for the merchandise it sells. Based on the fiscal year 2025 (FY2025) filings, Target generated $106.57 billion in revenue. With a reported Gross Profit Margin of 28.21% for FY2025, the implied COGS was approximately $76.51 billion ($106.57B revenue minus $30.06B Gross Profit). The Cost of Goods Sold Margin for 2025 was reported at 71.8%. To be fair, this margin reflects the net impact of merchandising activities, including higher markdown rates and purchase order cancellation costs, partially offset by growth in advertising and non-merchandise sales.

Store Operations and Payroll

Next up is the massive cost associated with the physical footprint and the team that runs it. As of February 1, 2025, Target Corporation employed approximately 440,000 full-time, part-time, and seasonal team members. This headcount is what drives your in-store experience and fulfillment capabilities across nearly 2,000 stores. Payroll, benefits, and training for this large workforce represent a significant, ongoing operating expense, which is why analysts watch headcount changes closely as a signal for wage strategy and capacity planning. The 440,000 figure represents a 6.02% increase from the prior year.

Selling, General, and Administrative (SG&A) Expenses

SG&A expenses cover everything else needed to run the business outside of the direct cost of the product. For the full fiscal year 2025, Target's annual SG&A expenses were $21.969 billion. In the second quarter of 2025, the SG&A expense rate was 21.3% of sales, which was slightly lower than the prior year, even as the company absorbed general cost increases. This disciplined cost management in SG&A is crucial for offsetting margin pressure from COGS.

The SG&A bucket includes key operational costs:

• Store payroll and operational overhead.
• Marketing and advertising spend.
• Corporate overhead and administrative functions.
• Costs related to the recent corporate workforce reduction of 1,800 roles.

Capital Expenditures for Physical and Digital Evolution

Target Corporation is actively spending capital to evolve its physical stores and supply chain. For FY2025, capital expenditures (CapEx) were reported at $2.891 billion, which was a decrease of 39.8% from the prior year. However, you should note that the company signaled a more aggressive investment posture moving forward, planning for approximately $5 billion in CapEx for fiscal year 2026. This future spend is explicitly earmarked to support store experience, remodels, and digital fulfillment capabilities.

Here's a look at how the key cost components stack up for FY2025:

Technology and Digital Infrastructure Investment

Technology spend is embedded in both SG&A and CapEx, reflecting a dual focus on operational efficiency and customer experience enhancement. The company is leveraging AI technology, including a collaboration with OpenAI to enhance its app shopping experience through ChatGPT integration. Investments in digital fulfillment, like the Target Circle 360 membership program powering same-day delivery, are a key driver of capital allocation, even if the reported FY2025 CapEx was lower than the previous year. The focus is on productivity initiatives, with expected annualized savings of approximately $180 million from recent business transformation efforts. That's how you turn a cost center into a competitive advantage, you defintely have to track those productivity savings.

Finance: draft 13-week cash view by Friday.

Target Corporation (TGT) - Canvas Business Model: Revenue Streams

You're looking at how Target Corporation actually brings in its money as of late 2025. The core of the business, as always, is moving physical goods. This means merchandise sales, which cover everything from apparel to home goods. Within that massive bucket, groceries and essentials are the steady traffic drivers, helping to offset the choppier performance in discretionary categories. To give you a concrete example of a high-performing merchandise segment, trading cards are tracking to become a more-than-$1 billion business for Target Corporation in 2025 alone.

For the full fiscal year 2025, Target Corporation posted total annual revenue of $106.57 billion. This figure reflects the overall scale of the business, even as the company navigates a tricky consumer spending environment.

When we break down the sources, it's clear that the high-margin, non-merchandise streams are accelerating, which is a key strategic focus for the executive team. Here's a look at the components we can quantify:

The non-merchandise revenue bucket is where you see the real momentum, especially from the retail media network. Roundel advertising revenue hit $163 million in the first quarter of 2025, marking a 25 percent increase year over year from Q1 2024. By the third quarter, year-to-date Roundel revenue reached $621 million, showing growth of over 35 percent compared to the prior year. Target Corporation estimates Roundel now generates nearly $2 billion in total value, which includes direct ad revenue and value that offsets cost of sales and operating expenses. Also contributing are the Target Plus third-party marketplace sales, which saw double-digit growth in Q3 2025.

Then there's the recurring revenue from loyalty. The membership fees from the Target Circle 360 program are designed to lock in high-value customers. The standard annual fee is $99 per year, though Target Circle credit card holders can secure it for $49 for the first year. This program is clearly driving behavior; same-day delivery powered by Target Circle 360 saw growth of more than 35 percent in the third quarter of 2025. The growth in these high-margin streams is helping offset pressure on the core merchandise business. Here are the key details on the membership structure:

• Target Circle 360 standard annual fee: $99
• Target Circle 360 introductory annual fee: $49
• Same-day delivery growth powered by Circle 360: Over 35 percent in Q3 2025
• Target Circle (free program) membership base (prior context): More than 100 million members