Is Target Abandoning — Or Sharpening? — Its Omnichannel Strategy?
The retail chain appears to be killing its e-commerce 'store of the future' program following a tough holiday season as Target tries to refine its brick-and-mortar tech intiatives.
Target’s sales during the crucial November and December holiday season were down 1.3 percent in a sign of industry-wide retail struggles, prompting the chain to rethink some of the more ambitious interactive programs it has been aggressively pursuing over the past two years.
One initiative in particular has apparently reached the chopping block: its sub rosa e-commerce program called Goldfish, which was dubbed as the “store of the future,” according to a report in Target’s hometown newspaper, Minneapolis’ Star Tribune.
Retailers have been hit by changing customer tastes driven in large part by the immediacy and lower prices by the likes of Amazon, as well as by a weak economic recovery that has hit the areas served by large department store chains like Macy’s and Walmart hard, resulting in lower sales volume.
As the Star Trib reported in March 2016, Goldfish was part of a wider $2.5 billion initiative designed to create interactive startups within Target to help it better compete against e-commerce rivals. Details about Goldfish were always hard to come by, but the project was run far from the Minneapolis chain’s headquarters by roughly 20 engineers in Sunnyvale, Ca.
When asked about Goldfish’s shutdown, a Target rep told the Star Trib that “At Target, we regularly pause to evaluate our business and have to make tough choices about where our company is best served to invest our time and resources. We recently made some changes to the innovation portfolio to refocus our efforts on supporting our core business, both in stores and online, and delivering against our strategic priorities. Target remains absolutely committed to pursuing what’s next. We see a tremendous opportunity to drive innovation in areas that will fuel our growth both in the short and long-term in areas such as digital, technology, supply chain and merchandising.“
Target’s Black Friday Promise
Ahead of Black Friday 2016, Target rolled out several upgrades to its online purchase/in-store pick-up program that promises faster service at all its 1,800 U.S locations.
In-store pick-up, on top of with expanded mobile payments and beacons, has been a central part of the Minneapolis department store chain’s omnichannel strategy for the past two years.
For example, in August 2015, Target started a beacon program with Estimote to round out its in-store sales assistance. It’s unclear how vital the beacon program has been, or even whether Target has continued to use it, since the company has not discussed those efforts publicly.
Along the way, Target’s experiments with interactivity has included retail pop-ups and a showcase IoT-based connected home store in San Francisco.
Back To Basics?
While many of these efforts seemed to have a certain “buzzy” quality designed to get attention, the apparent shuttering of its e-commerce project suggests that Target, like a lot of retailers that have experimented with a variety of interactive programs over the past few years, may be looking to get to a back-to-basics approach.
So instead of flashy, attention-getting proposals designed to impress the tech press, Target is likely to focus more on more mundane tools like the online-purchase/in-store pickup that promotes convenience and ease of shopping.
At the end of the day, not every store can emulate Apple’s “demonstration as destination” capability that gets excited consumers to walk in and try out the latest products.
People shop at places like Target for price and wide inventory, primarily speaking. Using technology in the service of those aspects may not make headlines, but it could better serve Target’s bottom line, which is what its primary audiences of customers and investors are most interested in.
That sentiment was echoed in Target CEO Brian Cornell’s statement about the company’s “mixed” holiday season performance last month.
“Of course, consumers shopping online and from their mobile devices isn’t a new dynamic,” Cornell said in a statement addressing the holiday season performance. “In fact, 98 percent of Target’s guests regularly shop online, and we’ve seen digital growth faster than the industry average for four consecutive years.
“And throughout the 2016 holiday season, we noticed a clear migration to digital shopping, a behavior we would attribute to how time-pressed our guests are during the season,” Cornell added. “They are looking for convenient options and our improved online experience coupled with free shipping and the ability to pick up orders in store provided an easy way for our guests to get their shopping done.”