Target pushes out its Cartwheel slowly but surely

Since first conceiving of Cartwheel last year, Target Corp. has adopted a cautious, almost tentative, approach to its digital coupon program. For one thing, Cartwheel represents the first major digital effort created entirely by Target staff. Plus, the process is relatively complex.

After a month into its Beta launch, Target has released some early numbers: more than 200,000 users have redeemed more than $275,000 in digital coupons. Among the products consumers mostly bought were Fresh Berries, Fruittare Popsicles, Dove Hair Care, and Market Pantry milk.

Users with Facebook accounts log into a website, where they can select from a large variety of deals, like 5 percent off Diet Coke or 10 percent off bath towels. Shoppers then purchase the items at a store, where they can redeem their deals at checkout with their smartphones. Users can also earn extra perks by recommending deals to their friends through Facebook.

When Target first previewed Cartwheel to this blogger in May, officials made clear that the program was a work in progress and they were looking for customer feed back. The retailer is especially interested in how to adjust their inventory levels with vendors to entice people with the right deals.

At first glance, 200,000 users doesn't seem like a whole lot for a retailer which alone employs 361,000 employees. However, aside from using the news media to promote Carthwheel's Beta launch, Target has not thrown the full weight of its marketing machine into the effort.

"200,000 sounds about right," said Kim Garretson, a founding partner of digital marketing agency Ovative/Group in Minneapolis.

The number will likely accelerate over the next few months as the program goes viral through social media channels like Facebook.

The company would not disclose how many users it eventually wants to sign up. But Target is right to go it slow, said Amy Koo, an analyst with Kantar Retail consulting firm in Boston. For one thing, Cartwheel requires consumers to go through a lot of steps, she said.

"It's not a frictionless process," Koo said.

Target certainly knows the value of simplicity. Chief Marketing Officer Jeff Jones recently told this blogger that the failure of its holiday design partnership with Neiman Marcus—50 products from 24 designers sold at two retailers—was partially due to the complicated nature of the collaboration.

"I think simple is better," Jones said. "Simple to understand. Simple to execute."

Take Target's 5 percent REDcard program. Analysts say the program works because it's simple to understand, five percent off total purchases every time a shoppers uses the REDcard.

With Cartwheel, Target is asking consumers to devote a lot of time and energy into a program so they can redeem relatively modest deals, Koo said.

Cartwheel could also contribute to a price perception problem with Wal-Mart, Koo said. By offering coupons on certain merchandise, Target is in fact admitting those products are more expensive at Target compared to Wal-Mart's Every Day Low Prices.