Target shelves robot store and secret e-commerce start-up

Discussion
Photo: Target
Feb 02, 2017
George Anderson

Target is cutting back on its innovation project plans to concentrate more on its core business operations after coming off a holiday selling season when same-store sales declined 1.3 percent.

The Minneapolis Star Tribune reports that among the projects being shelved are Goldfish, a secret e-commerce start-up that got the go-ahead a year back, as well as a store of the future concept using robots that was slated for construction soon. Other projects, while not scrapped, are being cut back as the chain seeks to get its business turned around.

Any decisions made, according to Dustee Jenkins, chief communications officer and senior vice president of communications for Target, were just part of the normal ongoing management of the company’s business.

“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,” said Ms. Jenkins in a statement. “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, according to the Star Tribune, refused to comment on specific cuts while maintaining it has identified areas such as digital, merchandising and supply chain where it can continue to innovate to grow its business.

Among the few relatively bright spots for Target in November and December was the chain’s digital sales, which grew 30 percent. The gains, unfortunately, came with a cost as free shipping offers and promotions drove down profits.

While Target is pulling back on its innovation agenda, mega-competitors Amazon.com and Walmart are upping investments in a wide variety of projects intended to create further separation from the rest of the retailing pack.

DISCUSSION QUESTIONS: Are you confident that Target’s leadership has the right strategic plan in place to turn the business around? What is your reaction to the chain’s plan to cut back on its innovation agenda?

Braintrust
"Target has not had a clear vision for its Silicon Valley presence from the beginning. "
"Maybe Target should take advantage of this pause to review its business processes as meaningful solutions may be closer to home..."
"Don’t you think it’s funny that you know about the SECRET e-commerce initiative? The only secret is how long current executives will keep their jobs."

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18 Comments on "Target shelves robot store and secret e-commerce start-up"

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Dr. Stephen Needel
BrainTrust

It’s been years since I was confident that Target’s leadership had the right strategic plan – no offense, Target.

Kim Garretson
BrainTrust
10 months 10 days ago
I believe two key factors behind these recent moves are talent and geography. Target has not had a clear vision for its Silicon Valley presence from the beginning. Initially it was to embrace start-ups, then its focused shifted to IoT and then the Goldfish project came in. Rumors were that Goldfish was not a solid idea embraced by many in senior management. With all this going on there in that hyper-competitive market, attracting and keeping talent must have been tough. Back in Minneapolis, Target just lost one of its best innovation executives, Jamil Ghani, to Amazon, and Amazon is poaching… Read more »
Max Goldberg
BrainTrust

I’m not sure that Target’s leadership has any plan. The retail giant lost its core story. How many consumers can tell you what Target stands for? Management seems to lurch from one tactic to another, hoping that the next bright shiny object will be the one that rescues their sales. I’m glad that they have now chosen to focus on retail basics, and hope that their attention will linger there long enough to make a difference. Target needs to find its place among its competition and hammer its core story home.

Tom Dougherty
BrainTrust

I have no confidence in Target’s store leadership. I even hesitate to call it leadership.

This is a sieve of a ship looking to plug holes as it tries to navigate troubled waters. Don’t you think it’s funny that you know about the SECRET e-commerce initiative?

The only secret is how long current executives will keep their jobs.

Adrian Weidmann
BrainTrust
Wall Street and short-term profits seem to always be the nemesis of innovation and change. The same-store sales metric is simply dated and out of sync with today’s need to create a shopping environment — not unique channels. These decisions are reactionary and meant to appease analysts and shareholders in order to protect their short-term financial interests. That being said — there are plenty of innovations that can be implemented into the “Store of Now” that can drop as much as 3 percent of the administrative cost of sale directly to the bottom line using “little data.” There are existing… Read more »
Jerry Gelsomino
BrainTrust

Every retail chain group should maintain an active research and development effort. This includes opening and testing innovative brick-and-mortar locations, new paradigms for shopping and entirely new business opportunities. These exercises could result in breakaway businesses or creative templates that make the core existing operations better. The determination of how much time and money to invest in the ideas is based on the expected ROI. Target’s leadership will probably get it right.

Ben Zifkin
Guest
10 months 10 days ago
When innovation projects stretch too far from core operations they are generally nothing more than PR pieces. I am not sure that is the case here. If this is a gimmick project, Target is right to shelve it and should not have invested to begin with. However, it doesn’t seem like it is. And if that is the case then it is scary that Target would pull back. It is a hard thing to do but, when sales get tough, it is usually a sign to invest deeper in innovation. I am not sure I know of any cases where… Read more »
Lee Kent
BrainTrust

For a while there I had my concerns about Target however, some of their recent decisions seem to be right on track. Cutting their innovation agenda? Not so smart. With Amazon’s innovation spend in excess of $15 billion in 2016, Target would be smarter to pick their best innovative moves and go for it. Now, I don’t mean that innovation is the end-all but when focused on the right objectives, it can propel a retailer forward.

For my 2 cents.

Richard J. George, Ph.D.
BrainTrust

There is no doubt Target is struggling to find the answer to its current woes. However, without knowing the specifics of its innovation agenda, I question these decisions, particularly as they relate to developing an e-commerce solution to an omnichannel perspective. The next article on RetailWire today highlights the challenges of omnichannel. I recognize that the operationalization of e-commerce is difficult but the experiments need to continue.

David Livingston
Guest
10 months 10 days ago

I have no confidence in Target’s leadership. Period. I’ve got a feeling they will be doing a lot of cut backs in all areas over the next few years. Poor Target, 1999 called and they want their stores back.

Robert Gately
Guest
10 months 9 days ago

Perhaps the decline of 1.3 percent reflects the shoppers who stopped patronizing Target after Target announced their new restroom policy?

Brian Kelly
Guest
10 months 9 days ago

That’s a legit concern. Why is TGT decomping? Where are its stores, where does the rev come from? Not taboo, just a fact that would need to be sorted. I created Sears sponsorship of Ringling Bros and caught holy hell from PETA.

Craig Sundstrom
Guest

I don’t understand the idea that you abandon projects because you are trying “to get … business turned around.” Isn’t “turning around the business” the whole point of them?

Or maybe they just mean they haven’t yet mastered the basics of buying, storing and selling and can’t handle an elaboration on this — can’t walk and chew at the same time. If that’s the case, then it’s not good … a company with a 50+ year history and tens-of-billions in sales ought to be able to handle the basics.

Brian Kelly
Guest
10 months 9 days ago
We’ll know more about Q4 in a few weeks, but we know the holiday was not good at TGT as it decomped while the industry comped, the spread being about 5-6 points. Yes, online comped 30%. But brand relevance seems to have softened. In times like this, extraneous activities get mothballed and focus on the core gets revved up. Nothing new here. Lets find out the profit picture and if supply chain issues are resolved. Does Cornell have a viable plan? I think it starts with the definition of with whom they want to do business. I think bright shiny… Read more »
gordon arnold
Guest

We have here yet another bad day of announcements from Target. The continuing failure of strategically imperative efforts and planning for real growth and/or support for market presence and expansion is beyond Target’s capability for several years now. Executive leadership is awash with failure and needs to seek help by means of strategic core replacement planning. But that will never happen, leaving us to look forward to more layoffs and closings. The fact that we are becoming all to used to this process is perhaps the biggest problem of all.

Roger Saunders
BrainTrust
Time for Target to get back to the basics of running the store. Reviewing a critically important question from the Prosper Insights & Analytics Monthly Consumer Survey, we looked at the past 4 months (October – January) at categories of children’s clothing, HBA, children’s toys, and pharmacy. As in most categories and for most retailers, price, location, selection, and quality are going to be the most often mentioned reasons to choose to shop MOST often at Target. We put those aside, and looked at some longitudinal figures around in-store experience, store appearance, store layout, newest styles, newest fabrics, service, knowledgeable… Read more »
Doug Garnett
BrainTrust

Good move by Target. Sci-fi level “robot” solutions are a bust. We need to be more honest with ourselves: Kiosks haven’t delivered enough value to drive profit with only minor exceptions. Why would a self-driving kiosk be different? These efforts seem designed to drive shareholder value not shopper value.

Retailers who survive will be those who focus on the core business: Making their stores and web stores places consumers like to shop and where they find products they like — all while delivering these sales profitably. Distractions like robots aren’t going to do that.

William Passodelis
Guest
10 months 9 days ago
Target years ago was “chic” — stylish and modern with offerings that people saw as different – and at a nice value. Shopping in their stores was — dare I say — “fun” because you didn’t know WHAT cool thing they were going to have, whether in appliances or fast fashion. I seem to remember that they had some unique and fashionable offerings and they had GREAT collaboration with designers, even big names (Missoni). WHAT happened? Was it too much work to do that? Too much cost? That really set them apart. They were NOT viewed as a “discount” store… Read more »
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Braintrust
"Target has not had a clear vision for its Silicon Valley presence from the beginning. "
"Maybe Target should take advantage of this pause to review its business processes as meaningful solutions may be closer to home..."
"Don’t you think it’s funny that you know about the SECRET e-commerce initiative? The only secret is how long current executives will keep their jobs."

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