The increasing penetration of smart phones and increased Internet usage is prompting retailers to look for newer mediums to connect with today’s tech savvy customers. Recently, Target (NYSE:TGT) has started offering Shopkick, a mobile application, that enables users to earn points in stores. Target received positive customer responses when it initially tested the application in seven cities. Now it plans to roll out this application in all of its 1,763 stores across the U.S.
Founded in June 2009, Shopkick has partnerships with leading companies including Best Buy (NYSE:BBY), Kraft Foods (NYSE:KFT) and American Eagle Outfitters’ (NYSE:AEO). Customers earn rewards by simply walking through the store or by scanning the barcodes of various products. The rewards can be redeemed for gift cards, Facebook credits, donations to charities, and various other rewards.
With close to 3 million users, the application has helped retailers in driving revenues and traffic to their stores.  We believe Shopkick could be a very effective medium for Target to offer special discounts and coupons to its customers. Target could strategically use this app to connect with customers and induce them to make final purchase decisions. This surely looks like a positive development for Target and has the potential to result in incremental revenues for the retailer.
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We have a price estimate of $57.60 for Target stock, which is in-line with the market price.Notes: