Target's digital strategy evolves from 'folding table setup' to enviable organization

Dive Brief:

Target remodeled 400 stores and equipped them with new technology over the last two years while investing in an infrastructure suitable for scaling, speed, and enterprise data and analytics solutions, CEO Brian Cornell said during the retailer's Q4 2018 earnings call.
The retailer's engineers already use a combination of augmented reality, artificial intelligence and virtual reality, but now Target wants to build out "an even more holistic digital strategy" for deeper customer personalization.
Eventually, Target wants an "unmatched suite of digital fulfillment options" supported by a new supply chain model which will eliminate backroom labor, according to CFO Cathy Smith during the call.

Dive Insight:

The earnings revealed the best traffic and sales since 2005 for the retailer, with digital initiatives at the heart of the growth.

Large retailers like Target are having to answer to the demand of digital, home and store to stay afloat or face shuttering their doors. Target's current digital strategy is marrying retail and mobile so customers have a digital companion while going from e-commerce to in-store.

The refresh demanded an investment of $7 billion in 2017, and included services like drive-up delivery. By 2020, the retailer plans to remodel another 600 stores.

The retailer's improvements to its operations and order pickup, which began in 2013, have evolved from the "folding table setup in the backroom" to the process it is now, COO John Mulligan during the call.

Further investments in technology and automation propelled the program to where it is now. "Digital growth isn't coming at the expense of our stores," Cornell said, and it's because the retailer has invested in having technology talent in-house.

The retailer's operations team has set out to make individual stores actual hubs, where traditional service management is challenged. It also means the company had to address the scalability issue that came with contractors.

Target effectively took the reigns from contractors and used the money saved to onboard more internal software engineers to eliminate lost productivity hours and enable employees and customers with new tools.