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Target ramps up in-store personalization on mobile with acquisition

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November 14, 2014

Target's iPhone app

Target’s iPhone app

In a reflection of the growing importance of mobile-powered in-store shopping experiences, Target has acquired Powered Analytics, a startup that focuses on personalizing in-store shopping through mobile technology, location data and predictive analytics.

The Pittsburgh, PA-based Powered Analytics offers a platform called Fabric that promises to bring an Amazon-like shopping experience into physical stores. The news points to how far Target has progressed in its embrace of in-store mobile following a period a couple of years ago when it tried to fight the trend toward showrooming.

“Powered Analytics has already seen the importance of a detailed mapping of inventory and product locations,” said Patrick Connolly, London-based senior analyst at ABI Research.  “This really empowers new services like product search and in-store navigation, which will have a lot of value in a Target store.

“Companies like Aisle 411 are doing something similar, while Point Inside has illustrated with a year-long A/B study the direct impact of product search on mobile application usage and more importantly basket sizes,” he said.

Mobilizing mass retail
Having a strong mobile in-store experience is becoming increasingly important for retailers, especially mass merchants.

This is one reason why the interest has been so strong in iBeacon technology this year.

Savvy retailers are building an array of in-store mobile services, from navigation and product location to offers and recommendations.

“Big Box retailers suffer most from showrooming, the ability to control that experience and price match is essential,” Mr. Connolly said.

Screen Shot 2014-11-13 at 4.03.46 PM

Target continues to refine its mobile app

The next level
Powered Analytics could help Target take the in-store mobile experience to the next level.

The company’s solution connects with a retailer’s app and uses information about a store’s layout and the location of products to deliver customized recommendations and messaging to shoppers.

“We’re excited about the new talent that will be joining The Target team as a result of this acquisition, as we seek to become a leading omnichannel retailer,” said Eric Hausman, a Target spokesman. “We don’t have anything additional to share about future plans at this time.

“In terms of mobile, we continue to believe mobile is the front door to Target,” he said.

Screen Shot 2014-11-13 at 4.03.59 PM

Location-based marketing
A key benefit of the deal will likely to be to help Target improve the contextual relevance of its in-store efforts.

“In order to meet expectations, they need a solution like Fabric to drive location-based marketing campaigns effectively,” said Sheryl Kingstone, Toronto-based research director at Yankee Group. “Forty three percent of consumers want location-based rewards, but that will only happen if they are contextually relevant.

“Target is using these strategies across the customer journey to increase engagement and help customers learn about products, make purchases, request service or gain rewards,” she said. “Personalized content, mobile shopping tools, rewards and coupons will help keep customers more engaged.

Powered Analytics will reportedly remain in Pittsburgh.

In-store ramp up
Target has been clearly ramping up its use of mobile in-store.

It is testing the CurrentC mobile payments solution with employees at a couple dozen stores (see story).

It is also testing the Curbside app in 10 stores, enabling users to easily order online and pick up in stores (see story).

This summer, Target launched an image recognition app, hoping to take back control of showrooming from Amazon while providing the omnichannel experiences shoppers want (see story).

These are in addition to the many initiatives Target has launched to leverage mobile for online shoppers, including the Cartwheel mobile offers site.

“At first, Target fought showrooming, but within one year the company did an about face embracing mobile in-stores with an active stance to embrace it during last holiday season,” said Sheryl Kingstone, x. “The company recently also created a digital advisory council.

“While mobile can’t fix the basics of pricing and merchandising, it can help create a more positive customer engagement strategy,” she said.

Store of the future
Going forward, a strong mobile in-store experience will help retailers when paired with strategy inventory and fulfillment strategies, many of which are also being driven by mobile.

It could also lay the groundwork for dynamic pricing.

“Inventory management and fulfillment are becoming a major deal,” Mr. Connolly said. “Longer term, with a tight inventory management system a store can avoid stock-outs, understand what products are out of stock and provide a next day delivery service or if a product is not shifting, provide offers to drive uptake.”

“Target is one of the first to look at how to introduce dynamic pricing, something that is about to become a major trend in bricks-and-mortar stores and is best enabled with technology,” he said.

Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York

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