Target's transformation roadmap makes mobile the front door

Target (NYSE:TGT) has embarked on a multi-faceted transformation to grow business and CEO Brian Cornell has declared mobile "the front door."

It's all about omnichannel at Target as the retailer strives to create a shopping environment without boundaries. And the multi-channel shopper is the prize as customers who shop both in stores and online generate three times the sales compared to shoppers who only frequent brick-and-mortar stores, according to the retailer.  

Management plans to continue making enhancements and investments in technology, supply chain and inventory management to create a better shopping experience. The expectation is to achieve annual growth in digital channel sales of 40 percent and contribute to a total projected sales growth of 2 to 3 percent and comparable sales growth of 1.5 to 2.5 percent in 2015.

Style, baby, kids and wellness are being prioritized as management builds on product categories Target already does well. Grocery is also being repositioned with a shift to a more differentiated assortment from the selection of household basics and convenience items in most P Fresh departments today.

Personalization is a buzzword for Target and the retailer plans to strengthen its data, analytics and technology capabilities to deliver more personalized digital experiences, loyalty programs and promotional offers, according to the company.  

"Through personalization and data intelligence, target shoppers will start being able to organize their lists based on their journey," said Target's VP of Product, Alan Wizemann, speaking at RetailLoco during SXSW Interactive last month. "We can have 700 offers live at any given time [on the Cartwheel app]. If we alerted the guest to all of them, they would go nuts. We look at mobile as a personalized journey to that guest."

And while much of Target's strategic focus remains on expanding its retail footprint, smaller stores in urban areas including TargetExpress and CityTarget are the strategy. Here, too, mobile plays a critical role.

"As we move into smaller stores, we want to have the same journey for our guests, the same assortment," Wizemann said. "[Mobile] allows us to turn those screens into a more personalized experience. We can do some pretty amazing things with small-format stores with fulfillment methodologies."

Target has been cutting costs but expects to realize savings from technology improvement and efficiencies. Target plans to make a capital expenditure investment of between $2 and $2.2 billion, including $1 billion in technology and supply chain improvements.

"While we're in the early days and there's no doubt that transformation can be challenging, we're taking the steps necessary to unleash the potential of this incredible brand," said Cornell. "I'm encouraged by our early momentum, and am confident that by implementing our strategy, simplifying how we work, and practicing financial discipline, we will ignite Target's innovative spirit and deliver sustained growth."

For more:
-See this Target blog post

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