Target’s Revamped App To Include Mobile Payments

by Raymond Pucci 0

Attention Target shoppers—mobile payments are coming to an app near you. Target intends to consolidate two apps into one and provide additional features including payments and store maps according to the following article.

Target’s mobile app strategy will undergo a significant change, starting this summer. The retailer announced this week it will soon combine the functionality of its Cartwheel savings app with its main shopping app, in preparation for an eventual Cartwheel shutdown. The Target app will also receive a notable upgrade this year, adding support for an indoor map that shows your location in the store, along with the nearby Cartwheel deals, in addition to support for mobile payments. According to Target, the decision to merge its apps into one is a result of customer feedback. Shoppers wanted an easier way to access all of what Target has to offer from one destination, not two.

Target isn’t the only retailer to streamline its mobile app strategy. A couple of years ago, Ebay shut down its wider suite of apps (Fashion, Motors, and Valet), to return their functionality to Ebay’s main app, for example. Meanwhile, other retailers like Walmart, Kohl’s, and CVS – all of which have their own mobile payments service – offer their payments and savings features within their main shopping app, not in a separate one.

The retailer had announced its plans to launch a mobile payments service earlier this year, but had not revealed when that would be beyond sometime “this year.” That’s still the ETA for the mobile payments portion of this transition – and, in fact, it could be pushed back to January, if the team needs the time.

We also already knew that Target’s initial entry into this space would be focused on supporting its Target REDcard holders, rather than a broader strategy that would allow for other forms of payment. The REDcard is Target’s own credit card, offering shoppers 5 percent off of all their purchases. The company declined to say how many cardholders it has, but noted they accounted for 24 percent of last year’s sales.

With Cartwheel, consumers today add deals to an in-app shopping list, then show their barcode at checkout to save on the items they’ve purchased that match the available discounts. Following Cartwheel’s integration with the main Target app, this process will continue – except that, with support for mobile payments, shoppers will be able to both save and pay by having that barcode scanned just once.

Target already has a large base of customers for its closed loop REDcard as well for its Cartwheel store discount app. They have a ready-to-go market for an anticipated consolidated app. We have seen how Kohl’s Pay was introduced last year and achieved significant lift from its existing in-house card and loyalty program. However the mobile pay market is getting crowded and the challenge for Target is to come up with a new app that integrates payment and marketing features without being too cumbersome to use.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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