In its boldest foray into digital retailing, Target on Wednesday launched a test version of Cartwheel, an ambitious collaboration with the world's largest social network that will allow users to earn savings via Facebook and then use their smartphones to redeem those savings in stores.
Though retailers have used social networks like Twitter and Pinterest to promote products and influence opinion, generating real sales has so far proven elusive. By using mobile devices to help drive people to its stores, Cartwheel might be the missing piece to this "multichannel" puzzle, Target officials say.
"For Target, this is an important step for us to test new technologies and learn from our guests as we continue to bridge the gap between digital and our stores," said Target spokesman Eric Hausman.
For Facebook, which has been trying to boost its mobile operations, the effort represents its most high-profile collaboration with a retailer to date as it tries to position itself as not just a place to share photos and status updates but also to conduct actual commerce.
"Target recognizes that shopping is an inherently social experience," Facebook said in an emailed statement. "It's been fantastic working with the company on the development of Cartwheel, and we're excited to see how Target customers use the product."
Here's how it works: Users log into Cartwheel.target.com with their Facebook accounts. They can start picking from a wide selection of deals, such as a 5 percent discount on a 20-ounce Diet Coke or 10 percent off Cherokee boys' cargo pants.
Once shoppers pick a deal, it appears on the Facebook newsfeed so other friends can see it. (Consumers can also adjust their privacy settings to block other users from seeing their information.)
"People like to talk about great deals," Hausman said. "They also like seeing what other people are doing."
Users can earn more discounts the more they shop or if they can successfully share their offers with other friends. As people use the site, they can earn "badges" like Super Scanner or Uber Saver to grab more discounts and perks.
Shoppers redeem their discounts by visiting a Target store where employees scan a special QR code on the shoppers' smartphones.
Though Facebook regularly works with companies like Wal-Mart and the Gap, the social network usually prefers a low-key approach to its retail partnerships, said Carol Spieckerman, president of Newmarketbuilders retail consulting firm.
With Cartwheel, "Target is putting a lot of weight on its relationship with Facebook," Spieckerman said.
Cartwheel might help solve one of the most vexing problems facing retailers today: how to convince people they still need to visit physical stores at a time when shoppers are increasingly using their personal computers, smartphones and tablets to purchase products online.
But Stacey Widlitz, founder of SW Retail Advisors, cautions that Cartwheel's offers must be strong enough to compel people to visit Target stores.
Otherwise, the deals will just clog up news feeds and annoy people the same way Facebook's targeted ads do, she said.
"If it's truly a great deal, it can work," Widlitz said.
Facebook, for its part, has downplayed its relationship with Target.
While the retailer calls Cartwheel a major partnership with Facebook, the social networking company characterizes the relationship as consultative, not financial.
Facebook, however, benefits through increased traffic to its site.
Cartwheel is only the latest bet Target has made on multichannel retailing. Ever since Target earned the scorn of shoppers when demand for its Missoni collection crashed Target.com in 2011, the retailer has made a flurry of investments into digital retail.
Target has installed free Wi-Fi in its stores and tested same-day delivery in select markets.
The retailer bought Cooking.com and Chef's Catalog and opened an office in San Francisco to attract technology talent.
Target also has greatly expanded its presence into social media, though the retailer has had to tread lightly thus far.
"The space is changing so much," executive vice president and chief marketing officer Jeff Jones told the Star Tribune in a previous interview. "Different platforms might have one role one day and a different role the next day."
Facebook, in particular, certainly presents the opportunity to generate sales, but Target has to do it the right way, he said.
"Facebook is a place where you enter a friend's conversation," Jones said. "That's what makes it tricky. If I'm going to enter that conversation, I have to enter it like a cocktail party. You enter in any social engagement so people want to include you, not exclude you. I think we are still learning. All brands are trying to figure that out."
Technology observers have long predicted Facebook could transform retailing.
But until now, Facebook has opted for a low-key, subtle approach.
The company recently introduced Facebook gifts, which let users purchase gift cards when they wish a friend happy birthday.
In any case, Target's decision to not yet connect Cartwheel to target.com has puzzled some analysts.
Right now, users can only redeem Cartwheels discounts in physical stores.
"I'm sort of surprised," Widlitz of SW Retail Advisors said. "Target would get a bigger response."
Spieckerman thinks Target, which has been eyeballing international expansion, will eventually integrate Cartwheel with Target.com.
Since Facebook is a global platform, the retailer can pursue its digital ambitions anywhere it chooses to open stores, like its recent debut in Canada, Spieckerman said.
MORE HBJ HEADLINES
Our new comment system is not supported in IE 7. Please upgrade your browser here.