TARGET CORPORATION CASE STUDY Joel Allman Bryan Bronchik

TARGET CORPORATION CASE STUDY Joel Allman | Bryan Bronchik | Kendra Royal Indiana University – Purdue University at Indianapolis School of Informatics and Computing INFO B 585 Biomedical Analytics Saptarshi Purkayastha 9 -NOV-2016

Agenda Company Overview 1 • Financial Information • Competitors • Timeline 2 DELTA Framework & Analysis 3 SWOT Analysis 4 Recommendations

Company Background Target , the second largest discount retailer in the US, is an “upscale discount retailer that provides high-quality, on-trend merchandise at attractive prices in clean, spacious and guestfriendly stores. ” Purpose & Beliefs “We fulfill the needs and fuel the potential of our guests. That means making Target their preferred shopping destination by delivering outstanding value, continuous innovation, and an exceptional guest experience — consistently fulfilling our Expect More. Pay Less. ® brand promise. ” Overview • Founded: George Dayton 1902 -Dayton Dry Goods Co. 1962 -Target • Headquarters: Minneapolis, MN • Nickname: "TAR-ZHAY" • Stores: 1, 774 (US) • Distribution Centers: 37 (US) • Employees: 341, 000 • 2015 Revenue: $73, 226 (bi) • Website: www. target. com Product Categories • Groceries • Electronics • Apparel • Office Supplies • Toys • Household Essentials • Pet Supplies • Home Furnishings/Decor

Total Segment Sales $73. 8 Billion Financial Highlights Financial Information Stock Price (TGT): $67. 05

External Environment Revenue Size Global Presence TARGET WALMART STORES, INC. AMAZON. COM SEARS HOLDINGS, INC. #6 Retailer #1 Retailer #8 Retailer #20 Retailer www. target. com www. walmart. com www. amazon. com www. searsholdings. com $73, 226, 000 $353, 108, 000 $61, 619, 000 $22, 129, 000 • Stores: NA • Distribution Centers: 104 • Employees: 230, 800 • Stores: 1, 611 • Distribution Centers: 28+ • Employees: 178, 000 • Stores: 1, 774 • Distribution Centers: 37 • Employees: 341, 000 LOW Intl. target. com, India • Stores: 5, 182 • Distribution Centers: 150+ • Employees: 1, 500, 000 MEDIUM 28 countries, 6200 locations HIGH 76 countries LOW 306 Canada, 66 Mexico,

Timeline 1902 Dayton Dry Goods Co. 1962 1 st Target 1960 Transitioned to discount store chain 1960 Opened 1 st distribution center 1967 Expanded nationally

Timeline 1974 1979 Achieved $1 billion in annual sales 1988 1974 Used planograms 1988 Unveiled UPC scanning Planogram UPC The planogram, a diagram that shows how retail products should be placed on shelves to maximize sales, was Target’s first use of strategic tools in the area of visual merchandising. The Universal Product Code (UPC), a barcode that uniquely identifies each product with a 12 -digit number, was Target’s first electronic means of capturing data with scanning systems.

Timeline 1994 1995 Launched Target. com 2000 1994 Unveiled brand promise 1995 Offered credit cards, gift cards, registries 2001 Operated Target. com on AWS 2007 Introduced credit card 2000 Released weekly ad 2005 Exceeded $50 billion in annual sales; Established Target India Expect More. Pay Less. ®

Timeline 2010 - 2012 2010 Selected Emnos for customer – centric insight 2010 Planogram Optimization and Space Optimization provided by SAS 2011 Expanded into Canada 2010 Presented at Conference; Relaunched Target. com 2011 Slowed growth 2012 Included in NY Times article; Expanded mobile presence; Implemented Teradata 2015 2013 - 2014 Launched Cartwheel digital savings app 2014 Enabled cards with chip-and-pin technology; Acquired Powered Analytics 2013 Introduced coupon app, subscription; Innovation Center; Experienced data breach 2014 Piloted e. Bay global shipping program 2014 Launched Wish List app

Timeline 2016 2015 Created data, analytics, and BI center of excellence Opened Cyber Fusion Center Equipped stores with secure chip card payment technology Invested $1 billion in technology areas Created guest center of excellence Explored use of RFID and Beacon technology in stores Enabled international sales with Borderfree Began shopcurbside. com pickup Shut down Canadian operations Launched Wonderlist gift guide Consolidated mobile and desktop target. com sites Broadened relationship with Group. M Media Business Tested new look in stores (LA 25)

DELTA Maturity Model 5 4 ANALYTICAL COMPETITORS ANALYTICAL COMPANIES ANALYTICAL ASPIRATIONS 3 LOCALIZED ANALYTICS 2 ANALYTICALLY IMPAIRED 1 Data Enterprise Leadership Targets Analysts

DELTA ANALYTICAL COMPETITOR Pregnancy Algorithm Background Father gets mad after Target sends teenage daughter promotional mailers for pregnancy/baby products based on an analysis of customer data. • Demonstrated passion for leveraging insights gained through analytics • Strategic use of large quantities of different types of data from multiple channels (e. g. , online, mobile, in-store) Methodology • Remediation of security vulnerabilities exposed in data breach (e. g. , new leadership, new POS terminals, chip-and-PIN cards, data sharing initiatives) • • Connection of organizational objectives to data across the enterprise • • Identified data set Looked for buying patterns and behaviors Create action items based on analysis Organizational Value • • • Increase sales Provide competitor advantage Strengthen customer relationships • Employment of experienced individuals to ensure usability of data to meet business needs • Partnership and collaboration with key vendors of data-related technologies (e. g. , Teradata, Hadoop)

SALES & MARKETING Guest Center of Excellence is designed to enable the organization to develop a greater sense of advocacy and empathy for the consumer in the retailer’s business decisions. SUPPLY CHAIN A distribution infrastructure enhanced to reduce the complexity of its operations, through the use of data across the supply chain, to deliver a seamless experience for guests. HUMAN RESOURCES DELTA ANALYTICAL COMPANY HR positions focused on benchmark analysis and the development of metrics to ensure competitive compensation and benefit packages to attract highly qualified talent. Pockets Of Success Achieved ENTERPRISE IT STRATEGY DRIVES ANALYTICAL VALUE Potential of Analytics Validated

DELTA ANALYTICAL COMPETITOR Keith Colbourn Senior Vice President, Loyalty & Lifecycle Marketing “Colbourn will lead the development of data-driven marketing strategies that drive traffic and sales, deepen brand engagement and build guest loyalty, including Target’s current portfolio of loyalty programs such as the popular savings app, Cartwheel, ” • Hired January 2016 • Experienced in retail data analytics • Prioritization of the development of an analytic culture and analytical capabilities throughout the organization, especially in leadership • Recruitment of strong leaders, many from competitors, who are subject matter experts in business intelligence and analytics • Presentation of analytic techniques at industry conferences (e. g. , Andrew Pole’s keynote at Predictive Analytics World in 2010 titled, “How Target Gets the Most out of Its Guest Data to Improve Marketing ROI”) • Executive sponsorship of professional, in-house network of analytical team members that provides mentoring, skill development, and collaboration (e. g. , Target Analytics Network)

DELTA ANALYTICAL COMPETITOR • Communicating Guest insights into Value o Personalized coupons based on visits/purchases o Community driven weekly ads o Focus on the community to provide “one stop shop” for Guests needs • Focus on Value o 2016 Holiday plan increases 20% [year over year] on the value category • Mobile Localized Intelligence o Increase usage and redefining stores and fulfillment centers remote Guests

DELTA ANALYTICAL COMPETITOR Casey Carl Oversees enterprise strategy, innovation, data analytics and business intelligence, as well as new business integration and operations with a “main goal of ‘infusing a digital Mindset’ in a company that has long been defined by brick and mortar operations. “ Chief Strategy & Information Officer Ujjwal Sinha “Led a 500+ person analytics team that was responsible for all BI and analytics functions, including predictive analytics, optimization, data science, big data, data quality, business intelligence and reporting across all business functions of the entire company. ” Vice President, Enterprise BI & Analytics Paritosh Desai Uses his “background in designing and delivering support systems using various advanced analytics algorithms” in the retail industry to accelerate Target’s data, analytics, and business intelligence capabilities by leading a center of excellence. Senior Vice President, Enterprise Data, Analytics, & BI Andrew Pole Studied data using machine learning algorithms to “identify and locate Target’s ideal market, informing its marketing strategy and overall reach, ” which led to controversy around their use of data mining. Director, Guest Management

Strengths & Weaknesses Strengths • Expertise in digital advertising • Number/variety of tools available to capture customer activity • Algorithms and predictive analytics techniques • Enterprise use of analytics Opportunities Weaknesses • [International] E-commerce sales • Wide variety of product offerings • Store associates’ application of analytic insights • Supply chain optimization • Grocery offering differentiation SWOT Analysis • Expanded online and mobile offerings • Exploration of new technology: o Wi-Fi/RFID generated heat maps o Internet of Things o Artificial Intelligence • Expanded use of competitive shipping options/services Threats • Data breach recovery • Competitor advancement in emerging technologies (i. e. , Walmart Pay) • Competitor advancement in analytics (i. e. , Walmart. Labs) • Competitor acquisitions (i. e. , Walmart’s acquisition of Jet. com)

DELTA Moving to the Next Level D • Continue to invest into big data and predictive analytics tools • Emphasize use of digital dashboard and visualization solutions E • • Benchmark current analytical maturity level for future research/improvement Integrate data across business functions, including social media and public census information L • • Continue creating “centers of excellence” Fill future open leadership positions with data-driven individuals T • • Jeff Jones improving “Guest experience” Support within the community with Community Relations, Global Affairs and Sustainability teams as well as Target Foundation A • • Create a rotational program (e. g. Walmart) Find middle-ground between the current organizational structure and retraining or restaffing analytical positions