You have to give credit where it’s due. Although Target (TGT) dropped the ball on Cyber Monday when its website crashed due to overwhelming traffic, and has yet to fully shore up its cybersecurity shortcomings since hackers stole debit card and credit card data from 40 million customers two years ago, the retailer certainly knows how to deliver a memorable, immersive shopping “experience.”
Whether or not these experiences actually make Target stock worth any more isn’t clear. It probably doesn’t … at least not directly.
Indirectly though, it’s the little things and attention to detail that can keep a company like Target in consumers’ good graces.
Welcome to Wonderland
Even if you’re not a fan or owner of Target stock, there’s no denying the company’s “Target Wonderland” in Manhattan’s Meatpacking neighborhood is cool, even if ultimately commercialized.
It’s only a temporary site, destined to be disassembled after Dec. 22, but anybody willing to make their way to 70 10th Avenue in New York City between now and then will be treated to 16,000 square feet of fun for “kids” of all ages. Target has assembled ten different attractions, including a giant Etch-a-Sketch, a giant Lego pirate ship that serves as the centerpiece of a ball pit, and more.
Oh … TGT stock also happens to be selling some goods at its Wonderland shop, too.
In fact, the underlying shopping technology may be the coolest aspect of the so-called Pop Up shop. Guests can use a special scanner to mark items they may want to purchase, and on their way out, the things they’ve decided to buy are handed to them by a robotic Santa arm.
It’s over the top, to be sure, but going over the top is the new normal when it comes to drawing — and impressing — a retail shopping crowd, and Target has subtly been doing it well for a few years now.
Not Target’s First Immersive Rodeo
While Target’s Wonderland is special, it’s not as if it’s something entirely out of the retailer’s wheelhouse. For instance, it opened a mini-store on a boat docked on the Hudson River a few years ago, and in 2013 built a life-sized dollhouse in Grand Central Station to promote its Threshold-branded home goods.
It’s all part of a much bigger plan to build the so-called “Retailer of Tomorrow” by testing different things today. In this case, one of the biggest tests is of the RFID system used to mark items for purchase while browsing a store, and having those items put in your hands at the time of checkout.
In a similar vein (and on a more permanent basis), TGT stock has also recently established an experimental store called Open House in San Francisco.
Open House is a means of selling goods that fall into the “Internet of Things” category. By demonstrating how these technologies work in a real home-like setting, rather than simply placing such high-tech goods on a Target shelf and hoping consumers figure them out, Target believes it can establish itself as a go-to name within what will eventually be a multibillion-dollar Internet of Things market.
And that’s just the beginning of what Target is aiming to become.
While the end-goal of these partnerships isn’t yet clear, Target is playing the role of incubator by supporting technology startups with a focus on retail technology. One of those partners is Techstars, which is known for its robotics work. That partnership has given rise to the not-entirely-crazy (all things considered) idea that Target is looking to develop a store manned by robots.
Bottom Line for Target Stock
It’s tough for would-be owners of Target stock to build an internal investment thesis on the touchy-feely stuff that has no clear ROI. It’s also not clear if the touchy-feely stuff Target is doing is enough to offset its other gaffes and shortcomings in a world where eBay (EBAY) and Amazon.com (AMZN) are becoming the shopping norm … often at better prices than Target offers.
Yet, there’s still a lot to be said about immersive “experiences.” Indeed, Disney (DIS) has become an immovable icon in the entertainment industry by delivering immersive experiences at its hotels and theme parks.
Maybe, just maybe, at least some of Target’s success has to be attributed to its seemingly little things.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
