With Cartwheel app, Target spins out of slow-moving culture

  • Article by: KAVITA KUMAR , Star Tribune
  • Updated: August 11, 2014 - 9:50 PM

Successful digital Cartwheel project had to buck retailer’s slow-moving culture.

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The center of operations of Target’s Cartwheel coupon app. The social media-driven app was initially a hard sell at the retailer.

Photo: RICHARD SENNOTT • richard.sennott@startribune.com,

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In a year of high-profile stumbles, Cartwheel has been one of Target Corp.’s biggest wins.

The digital coupon app has generated droves of traffic at a time when smartphones are becoming an increasingly important shopping tool. Cartwheel, which allows customers to select deals that can be redeemed in the check-out line, has a devoted and growing user base of 8.5 million people who have used it to rack up more than $95 million in savings.

And none of Target’s competitors -- not Wal-Mart or Amazon -- have anything quite like it.

“There’s a notion among Wall Street that Target is behind from a digital standpoint, but you can argue this is one of the most successful retail apps out there,” said Matt Nemer, an analyst with Wells Fargo.

But according to Target officials, Cartwheel almost never happened. The Minneapolis-based retailer’s slow-moving and risk-averse culture nearly sank it before it launched a year ago. Target managed to save it by departing from the old Target way.

Now Cartwheel is being held up within the company as a role model for how the company can move faster and test new ideas in the marketplace in real time instead of getting held up in a boardroom.

“Anytime you’re facing change, you have to give people a vision of what you want them to do,” said Jeff Jones, Target’s chief marketing officer. “And you have to give them evidence that it actually works.”

Cartwheel is a big piece of that evidence. But Target needs more Cartwheels, he said.

Now analysts are curious how Target’s first CEO to come from outside may further shake up Target. Brian Cornell, a former PepsiCo and Sam’s Club executive, will take the reins on Tuesday.

But in the weeks leading up to Cornell’s appointment, Target’s leaders have already been more open about the need to remove layers of bureaucracy and be more nimble. Target’s journey with Cartwheel highlights how the company sometimes got in its own way -- and also the potential rewards for working in a different way.

“It was instrumental in seeing how something like that can get bogged down,” said Carol Spieckerman, president of retail consulting firm newmarketbuilders. “The best lesson they can learn from Cartwheel is just looking at its success -- ‘Wow, we did this thing.’ But next time, it can’t take that long and we can’t let everybody have a vote.”

Cartwheel allows customers to pick from more than 600 promotions that encompass about 30 percent of the store.

It’s also been a work in progress. Since it was launched last May, Cartwheel has undergone dramatic transformations, with thousands of updates both small and big. One of the most significant was making it into an app. Cartwheel was originally envisioned to be primarily a website-based tool, but the team behind it quickly pivoted to make an app, which is how it is mostly used today.

The initial idea behind Cartwheel was hatched in the summer of 2011 during a brainstorming session at Lyon’s Pub, a few blocks away from Target’s downtown Minneapolis headquarters. The social business strategy team was trying to think of ways to tap into the power of Facebook. They came up with the idea of giving Target’s Facebook fans some sort of a discount that they could personalize based on the things they like to buy.

The concept was initially a hard sell at Target, said Sarah Peterson, who was part of the original Cartwheel team and is now its leader. The retailer had just come out of an arduous process to take over its website operations after farming it out to Amazon for a decade. But in December 2011, company leaders were intrigued enough to fund Cartwheel as a project.

At Target, that meant it became a small part of a whole lot of people’s duties.

“So everyone had this project as one-eighth of their job,” said Peterson. “It got sort of chaotic.”

The team swelled to more than 200 people. At any one time, she said, the project had as many as a half dozen different leaders, who each had their own set of priorities and thoughts about what Cartwheel could be.

  • How IT works

    • Users can select up to 10 deals, but can “unlock” more deals.

    • Users can pick from more than 600 promotions.

    • A unique bar code is then generated for the user, which the cashier scans at the check-out line to apply the savings.

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