Target’s second-quarter sales uptick was accompanied by faster delivery speeds as sortation centers expand into a larger role in the mass merchant’s supply chain.

According to Michael Fiddelke, Target’s chief operating officer and chief financial officer, local orders processed through a sortation center arrive more than one day faster than the company’s network average.

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Most importantly for the Target business—faster shipping doesn’t require more dollars invested. The retailer’s unit delivery costs from a sortation center are about 20 percent lower than the average, the CFO said during the company’s Wednesday earnings call. Mass merchants appear to be figuring out how to optimize these expenses as they scale their logistics networks, with Walmart saying just days earlier that it slashed delivery costs per order nearly 40 percent year over year.

In 2024, Target’s sortation centers have processed 19 percent more packages than the year-to-date period in 2023.

This was the plan all along for Target, which is spending $100 million on the sortation project to bolster its last-mile delivery capabilities. The facilities are designed to serve a different purpose than the company’s legacy distribution centers, in that they’re positioned farther downstream from the retailer’s stores.

The sortation centers provide another direct, but often unheralded benefit to Target, Fiddelke noted. Processing space is freed up in the stores the facility serves in the individual market, while saving labor costs in those locations as well.

Target is opening its 11th sortation center this month, debuting it in Detroit. The warehouse is expected to process up to 60,000 packages daily by 2028, while operating in a “smaller-than-average” footprint, according to Fiddelke.

Last year, the Minneapolis-based retailer outlined a goal to operate at least 15 sortation centers by the end of 2026.

“Beyond growth in the number of these facilities, our existing sort centers continue to ramp up their capacity, and we’re finding new ways to integrate them into our broader network,” said Fiddelke. “For example, our recently opened sort center in Chicago will be feeding the Detroit sortation center, increasing the number of packages eligible for next-day delivery in that market.”

Target is also cutting down fulfillment costs from both within the warehouse and the store by using fewer brown boxes for packaging.