How Target is rethinking the #TargetRun

This past weekend, I made a #TargetRun to the Target in Fenway. It. Was. Awesome. Call me basic, but I love Target and since they have almost everything a college kid could Screen Shot 2018-02-27 at 10.09.12 AM.pngneed, it’s never hard to find an excuse to go. I know that I am not the only one out there with a strange love for Target. That said, the other day, as I wandered aimlessly through the aisles, I began to wonder how Target has continued to attract shoppers like me despite the fall of the typical “big box store”.

In 2016, Target experienced its largest ever one-day decline in its stock following a report that the company had missed its sales and earnings expectations for the year. One of the main reasons for the retailer’s decline in sales is that, like many other big-box stores, Target is in constant competition with Amazon. As online retailers like Amazon become more willing to ship large or bulk items, one of Target’s biggest competitive advantages dwindles. Furthermore, the convenience aspect of Target is overshadowed by services like Amazon Fresh, which make it easier to order rolls of paper towels from your couch than to run to your nearby Target. In general, the movement of customers online makes it more difficult for Target to deliver on two things it has been known for in the past: store experience and style.

Upon returning home from Target, I decided to do a little research to find out how the retailer is reviving itself from this 2016 blunder and responding to changes in its industry. What I found is that Target is fact investing significantly in its digital transformation (some say that number is close to $7 billion). What follows are some initiatives that I found to be quite impressive.

The Target App

The Target app has been around for a while, but only recently have they upped its game. Last summer, Target merged its savings program app, Cartwheel, with its main shopping app. The decision to integrate Cartwheel with the Target app was made with the goal of creating a more simple, unified platform that customers will be more willing to adopt. In September of 2017, Target further improved its app by adding beacon and Bluetooth technology which can show a user’s location on the app’s map as they move throughout the store. The purpose of this upgrade was to help customers find what they needed faster as well as connect them to nearby discounts. Then, in December, another update to the app was made when Target announced the launch of a digital wallet feature. Using the feature (creatively named “Wallet”) customers can now pay with their Target REDcard and save with Cartwheel, all in one scan. One of the biggest benefits of this feature is a faster checkout process (4x faster according to Target).

wallet_collage2.jpg

Partnership with Google

Starting in October 2017, consumers nationwide have been able to shop their local Target store using the Google Express app or website (Google’s home delivery service). Users can also shop for items using the Google Assistant or Google Home device. This capability positions Target to compete directly with Amazon.

Acquisition of Shipt

In December, Target acquired Shipt, a same-day delivery company, for $550M. “By acquiring Shipt,” explains Target COO John Mulligan, “ we’ll be able to take advantage of our network of stores and Shipt’s technology platform and shopper community to quickly offer same-day delivery to millions of our guests.” og-imgShipt will be a wholly-owned Target subsidiary, but it will continue to operate independently. As of right now, the same-day delivery service is only available in 57 stores in Alabama and Florida (near Shipt’s headquarters), however, Mulligan says that customers can expect to see that number grow quickly. He estimates that the majority of stores will offer the service by the 2018 holiday season. For a $99 annual fee, members will be able to browse Shipt’s online marketplace for Target products (including groceries and fresh foods). After placing an order, Shipt shoppers will visit the necessary stores, buy the products, and deliver them, all within a few hours. Target’s entrance into the same-day delivery market puts it in direct competition with Amazon Prime, whose membership fee is also $99 per year. However, an Amazon membership also provides perks other than same-day delivery so it will be interesting to see consumer reactions to Target membership fee once the service gets rolled out to more stores.

In conclusion, it’s clear that Target is taking their digital transformation quite seriously. However, one key question will be whether Target’s reputation for creating a shopping experience will translate to their new online platforms.

 

 

Additional Sources:

https://diginomica.com/2017/08/17/target-bullseye-digital-delivery-transformation/

https://www.forbes.com/sites/greatspeculations/2015/09/02/target-betting-big-on-digital-transformation-likely-to-yield-these-benefits/#6c887276c5e5

https://www.theatlantic.com/business/archive/2017/03/target-earnings/518352/

8 comments

  1. I love Target, you are not alone! I’ve found some great hidden gems just perusing the aisle.

    This felt very Amazon/Walmart to me. In this day and age, big box stores have to compete online. Target had some great in store presence with their limited collections (Lily Pulitzer for Target ladies…) but getting integration with their app definitely had some stumbling blocks. As a user I went from frequent coupons to not even being able to find them. They’ve bounced back, but it’ll take more than an app to get shoppers into the digital sector. I am really intrigued to see if the acquisition of Shipt helps compete with Prime!

  2. That’s a great post. I often go to Target myself so I can relate to your Target love. However, I have never associated Target with online shopping and never heard about the digital initiatives Target is investing in. I feel like they should advertise it’s Google partnership more if they want people to use it. I also think that Amazon is such a dominant player in the online shopping market it would be hard for Target to compete with it. Their app would have to offer much better service to incentivize people to switch from Amazon, especially given than most people are currently very satisfied with Amazon’s service. Anyways, I think it is good that Target is investing in digital initiatives. Even if they can not compete with Amazon, they can improve their in store experience with the app you mentioned. As you said, it will be interesting to see how their investments with turn out.

  3. Nice post! I always go to Target at the beginning of the school year to get dorm essentials because they have everything there and it’s easy to find. However, I have found that I don’t go to Target too often during the semester because it is kind of a hassle to get there and Amazon is much more convenient when they ship it straight to your door. I do think that becoming a more digital company is an important step for Target because online shopping has become very common in people’s lives. In addition, it is easier to shop things online because of the search bar and the category search that websites provide. Sometimes when I’m at Target, I find myself walking around the entire store in order to find something (which is also part of the in-store experience). I am confident that they will see improvements by using a more multi-channel strategy.

  4. This is a great post! I am also a huge Target fan. However, this post did get me thinking about how I typically need a purpose to drive all the way out to Target but once I’m there I always get caught up roaming through the whole store. Then I end up buying more than I intentionally went out to get. However, if the app were to become more prominent I would probably only get what I need quickly and efficiently and not browse as much. I know I’m only one consumer but I also know most of my friends are the same way so I can’t help but wonder what kind of effect that would have, if any. Amazon, on the other hand, has such a huuuge product offering that even if some people purchase fewer items at a time, there are so many people going to their website to find the variety they can’t find in stores, that the quantity of orders could be what makes up for the size of the orders. Just today I had to order teal suspenders off Amazon because my younger cousin needed that very specific color for a party and could not find it in stores anywhere. As much as I love Target, they couldn’t help me with this and I had to resort to Amazon. Just another small sale adding to their total orders in a day. I have not done any kind of research on this but it would be interesting to look into!

  5. As a frequent Target shopper, I am surprised that this is the first time I’m hearing about most of these tech advances. They should definitely highlight these more in their direct communication they have with their shoppers on a seemingly daily basis. (I must get at least 5 emails a week). On the other hand, I am also a Prime member. This basically means I typically do in-store shopping at Target and online shopping on Amazon. I think the best way for Target to utilize their technology advances is to apply them to make the in-store shopping experience as easy and fun as possible. Even if you order groceries on Amazon with the 2-hour delivery, there is nothing as quick as making a “Target run.” And when do you ever leave Target with only the items you went in for? Never! I think online shopping for Target will end up cutting down on those impulse purchases we all make during our in-store experience. I think it is in Target’s best interest to use their technology to keep customers coming in the doors.

  6. What a great post! I agree with others’ comments about the unique experience Target provides at the store, competitive advantage that Amazon has, and the convenience Amazon users have over Target. To add just one more advantage on Amazon, the student discount (or free period) for Prime makes it even more attractive for college students. Frankly, I have used several of my email accounts to get the free membership benefit from Amazon multiple times, and they have been great. In addition to the technological benefits, Target must identify their most revenue-generating customer segment and promote a program or discount to be competitive with Amazon and other retailers. This feature is quite big, and it requires high scale to maintain.

    However, I also think Target’s in-store experience is its unique competitive advantage, and its efforts to enhance the in-store experience for customers is certainly the right move for them. I also remember reading about the “online matching price” service Target provides, where they match the online price (typically cheaper) if their retail price is higher. Emphasizing this feature and informing tech-savvy customers who still enjoy the “Target run” experience will garner Target more customers that they’ve lost to Amazon long time ago.

    1. Jo is right. Target cannot hope to be competitive if they do not play to their competitive advantage (hence the term). Butting heads with Amazon in a space it already dominates will only work if they are able to leverage their price-matching. However, I think they will be at a severe disadvantage with not only a membership fee, but one even more expensive than Amazon Prime! Even if Target has great deals, it gets difficult to justify having multiple online shopping memberships. It would be like having a membership to BJ’s and Costco. Each might have unique products you like, but it is unlikely you are buying so much from both stores that it is worth it for both cards.

      Does Target have unique products Amazon doesn’t offer? I don’t know, but possible exclusivity deals might help level the playing field.

  7. I, like most people it seems, love going on the occasional Target run. That said, because I don’t have a car, have trouble getting there and carting things back on the regular, so I really only go once or twice a year. I have also looked online and shopped on Target’s website from time to time in the past, but I only seek it out when I’m looking for a bigger-ticket item that I specifically need. One of the advantages that Target seems to have is that when you go in for one thing, you walk out with a million things you never knew you needed. In the online sphere, Amazon has done a great job of doing the same sort of thing. If Target can replicate this phenomenon that they have captured in the in-person store in the same way online, I think that they will be able to excel and maybe even rival Amazon going forward. Until then, I think these movements to avoid obscurity are definitely good steps forward but won’t entirely save them.

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