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Target forms council to speed digital transformation

May 29, 2014

Digital transformation is still high on Target's to-do list, despite its recent data breach debacle and the executive suite shakeup that followed. To help achieve that objective, Target has formed a Digital Advisory Council, which includes Sam Yagan, CEO of Match.com, Roger Liew, CTO of Orbitz Worldwide, Ajay Agarwal, managing director of Bain Capital Ventures, and Amy Chang, CEO of Accompani.

The role of the council is to help Target spur innovation and transform the shopping experience for the chain's customers in stores and online. It will meet quarterly with Casey Carl, president of omnichannel for Target.

"This new group is bringing their tremendous talents and experience to help guide Target's strategies and tactics," said Mr. Carl in a statement. "They're also providing fresh, disruptive ideas that will help us re-invent the Target run for tomorrow's guests."

"I think there's a golden opportunity to leverage the physical assets of retail, the brand, the community, the kind of relationships you have with your customers and combine it with mobile and digital to create a fundamentally new experience," said Mr. Agarwal during a recent visit to Target's headquarters, captured on a YouTube video.

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Target has denied that the creation of the council had anything to do with last year's data breach. "The pace has changed in retailing," Eddie Baeb, a company spokesperson, told VentureBeat. "The next phase is coming, and we're looking to create a new kind of retailing."

In addition to the formation of the digital council, Target also announced plans to hire at least 50 new software engineers for the company's Target.com and mobile product teams. Most of the new hires will be based in Minneapolis with the rest in Target's Technology Innovation Center in San Francisco.

FINANCIALS:     [NYSE:TGT] [ ]

Discussion Questions:

What do you think a digital reinvention will look like at Target? How do you think the members of Target's Digital Advisory Council can most help the retailer?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How helpful will Target's Digital Advisory Council be in helping the company achieve digital transformation?

Comments:

Digital and brick & mortar retail have struggled to complement one another. The willingness to change is directly proportional to the degree of pain that is being endured. Given the pain Target has (and continues) to endure over the past year, they may have finally had enough to facilitate a change in culture and behavior.

The Advisory Council can certainly provide innovative and valued insight, but why does it need a public proclamation? Anyone who spends some time at NRF and reads RetailWire will get great insight and direction. All too often these "events" are staged for the benefit of Wall Street and analysts to bolster the stock price. The real challenge is to work with visionaries who can assemble and activate digital solutions that are valued by the shopper. More often than not, there are too many cooks (with tremendous egos) in the innovation kitchen.

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

Digital reinvention at Target should look to the basics - those areas where Target has fallen so badly - security, speed and accuracy. The advisory council should hold a mirror to Target, freely comparing it to what its competitors are doing, while helping to create a vision of where Target should be going.

It's worth noting that none of the advisory board members are retailers. Was this intentional on the part of Target? This is where the company needs the most help. A pure-play ecommerce player would have been a welcome addition to the panel.

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Max Goldberg, President, Max Goldberg & Associates

As the football metaphor goes, make sure you catch the ball before you run.
Max is correct, the focus should be on data security. The goal should be to regain the trust of shoppers who are now painfully aware of the problem Target has had in this area. One more issue would severely damage the brand.

Even though it's not as sexy as some other digital projects, defense needs to be a priority.

Lewis Olishansky, Principal, Retailmatics

Digitization is one of the key technology trends cutting across everything we do. Retail is not immune to this and should view digitization as an opportunity to reinvent themselves and the industry to be in tune with changes in consumer demands and lifestyles.

I anticipate digital transformation at Target to take two broad approaches: (1) tactical steps to integrate the physical and digital assets via customer order/pickup/ship scenarios and subscription services. (2) Strategic steps that begin to eliminate physical world and traditional organizational processes from dictating future direction. That means to view the digitization of everything as opportunity to redefine what retail means in the first quarter of the 21st century - how assortments are created, how products and services are defined, the relationships with vendors and suppliers, what a digitally-driven supply chain might look like.

Disruptions happen most often from players outside of the existing industry. These innovators are not restricted by existing processes and legacies, earlier successes or sunk cost investments. Having a digital advisory council as Target has done is a strong step in the right direction. The hard work comes with what they do with it.

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Mohamed Amer, Vice President, Global Consumer Industries, SAP

It is going to take a lot more than this to help Target. It will need a very powerful culture change in order to make a difference and this just doesn't do it. It looks more like window dressing.

Edward Chenard, Innovation Lab Leader, Target

As part of the technology community in South Florida, I hear a lot of start-ups and companies pitching their bigger and better ideas for retailing with a smartphone, with the shared view of Ajay Agarwal of Bain, that "the smartphone is a remote control."

While it is true that consumers are using their smartphones to shop in consistently growing numbers, this is not the reinvention I hope to see at Target.

I think Target is smart to explore smaller store footprints, such as Target Express, and expand the brand in urban areas. Clearly, they are working on social and digital strategies. But what I most want to see is the execution of disruptive retail formats in-store that are experiential and educate and engage the customer. In addition, dedicated sales associates who are passionate about the brand and knowledgeable about the products they are selling are a big asset.

Focusing on the customer with an exceptional shopping experience and engaging personal service is what Target needs to do, to recover from the holiday data breach, rebuild customer relationships, and truly reinvent the Target retail experience.

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Karen S. Herman, Founder & Design Director, Gustie Creative LLC

Isn't it specious to think that a retailer would simply add these companies to their board "to help spur innovation and transform the shopping experience for the chain's customers in stores and online"? Does anyone think that the actual businesses of these new board members can eventually, i.e. sooner rather than later, be integrated with and offered by Target?

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Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce

This is the right tactic for the wrong goal. Councils do not speed digital transformation in large enterprises, particularly if they only meet quarterly.

Councils grab news coverage, help executives think out of the box, help members grow their networks, and recruit thought leaders who will evangelize Target externally.

What are some of the "right" tactics for digital transformation of a large incumbent?

1. Empower small teams deep in the organization to innovate. Give them budgets, deadlines, and accountability and they will amaze you.

2. Aqui-hire. Talented teams who succeeded in the past stand a good chance of succeeding again - if given power in the organization.

3. Don't associate transformation merely with the front office. Back office functions need it more. Old school ERP systems put a slow choke hold on innovation. Flexible SaaS platforms accelerate new initiatives.

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Dan Frechtling, Vice President, Global Product Management, hibu, PLC

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