Takeaway: Target's e-commerce problem can't be fixed by a simple digital advisory council.

 Hedgeye Retail: $TGT Not Innovating Fast Enough - large 218264327

Target Forms New Digital Advisory Council

  • "Target Corp. announced it has formed a Digital Advisory Council, as part of its efforts to accelerate its digital transformation. The panel of technology industry leaders will help guide Target’s omnichannel strategies and push Target to innovate faster, and discover new ways to leverage technology to enhance the guest experience – both online and in stores."
     
  • The council includes experts with varied tech backgrounds, and is comprised of:
    1. Ajay Agarwal, Managing Director of Bain Capital Ventures
    2. Amy Chang, CEO/Co-Founder of Accompani, formerly led Google Analytics
    3. Roger Liew, Chief Technology Officer of Orbitz Worldwide
    4. Sam Yagan, CEO of the Match Group and CEO/Founder of OkCupid
  • "The council will meet quarterly as a group with Carl and others driving Target’s omnichannel strategies, including Target.com and Mobile teams, the Enterprise Strategy team and other Target leaders. Council members, who will serve two-year terms with an optional third year, also will be called upon to provide guidance on various topics and to help Target connect with other tech leaders."
     
  • "In addition to forming the new council, Target is bolstering its internal digital talent with plans to hire at least 50 new software engineers this year for Target.com and Mobile product teams. The engineers will be primarily based in Minneapolis, where they will work as part of the company’s new digital product teams. Some new engineers will be based in Target’s San Francisco office."

Hedgeye Retail: $TGT Not Innovating Fast Enough - Target Digital Advisory Council1

Takeaway From Hedgeye’s Brian McGough:

Target's e-commerce problem can't be fixed by a simple digital advisory council. Some of the members make sense to us, like the former head of Google Analytics and the CTO of Orbitz. But the founder of OkCupid – the self-proclaimed 'best Free dating site on Earth'?  Not so sure about that one.

The biggest positive, in our opinion, is that Target is hiring 50 new software engineers. We give Target props in that regard, as it's investing in an area it has long ignored. Most of the developers will be based in Minneapolis – which is not exactly a hub for code-writing talent. Most importantly, we've got to ask ourselves, is it enough? After all, Target has a $2.5 billion e-commerce business and it is hiring 50 people. Wal-Mart just announced that it is hiring 500 people to support its e-commerce platform. Could this effort be additive for Target? Possibly. But it can't continue to ignore that the competition continues to run at a faster rate.

Our sense is that this is the first thing that a new CEO addresses. We also think whatever we see out of the new CEO will take down margins for 2-3 years before it ultimately helps the top and bottom line.

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Editor's Note: This is a complimentary research excerpt from Hedgeye Retail sector head Brian McGough. Follow Brian on Twitter @HedgeyeRetail

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