The last week has seen some dramatic announcements of restructuring and refocusing from Target to jump start their sales. Target outlined plans for $2 billion to $2.2 billion in capital expenditures this year, with $1 billion going to technology investments including its supply chain and inventory management systems. Company officials said this will help it maintain or even grow Target’s 40% annual growth rate in its digital channel. Target plans to take a “channel-agnostic approach” to growing its business driving the total Target experience throughout online, mobile and stores. Target has made some dramatic improvements to the user experience of its digital channels. The company has reconfigured its team structure to move faster, and took the friction out of the shopping experience. Mobile saw explosive growth, Casey Carl, chief strategy and innovation officer for Target, said mobile is “the new front door of Target.” Ninety-eight percent of Target guests shop digitally. A vast majority of that shopping occurs using a mobile device.
These announcements align with my recent discussions regarding the changes ocurring in the consumer attitudes and practices in the retail market. I think this is the first round however in the start of a market disruption and not just a new CEO’s shake up of one major retailer. Target's plans are not however targeted to the new consumer shopping demands and so this again is the first round of changes. The focus on the omni-channel purchasing model and the supply chain revision to support that model is a good start, however it only addresses the foundational framework to support purchasing.
The consumer shopping methods driven and supported by mobile technology is on the verge of causing a major disruption of the retail market. This disruption is intially being driven by third party services starting with Groupon and extending now to location based notifications from Retail Me Not as examples. These types of services are providing consumers with shopping information that is cross channel and broad focused into many categories. I can start my shopping at a mall and using one of these services I can conplete my purchases on line and then finish the day with a nice meal at a near by restaurant using discounts from these services.
These services extend mobile technology and with it the consumer shopping capabilities to drive the retail disruption. This disruption is quickening now as consumers flex their imagination and the mobile technology capabiltiies. I see the reaction and the encouragement from pure Internet players and the best example is Amazon. For example Amazon has changed the market and shopping patterns with their Prime offering that provide 2 day delivery on all orders and the reaction to this major shift from Amazon is other retailers re-evaluating and lowering the order value totals for customers to receive free delivery.
And now for the audience participation portion of the show…
ECommerce will have wide ranging impacts on both the retail and manufacturing sectors. How can you focus these abilities to improve the consumers’ experience? Improving the consumers experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes. In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas. How can you support these continuously changing requirements?