Target 2014 Annual Report Download - page 11

If we are unable to successfully develop and maintain a relevant and reliable omnichannel experience for our
guests, our sales, results of operations and reputation could be adversely affected.
Our business has evolved from an in-store experience to interaction with guests across multiple channels (in-store,
online, mobile and social media, among others). Our guests are using computers, tablets, mobile phones and other
devices to shop in our stores and online and provide feedback and public commentary about all aspects of our business.
We currently provide full and mobile versions of our website (Target.com), offer applications for mobile phones and
tablets, and interact with our guests through social media. Omnichannel retailing is rapidly evolving and we must
anticipate and meet changing guest expectations and counteract new developments and technology investments by
our competitors. Our omnichannel retailing efforts include implementing new technology, software and processes to
be able to fulfill guest orders from any point within our system of stores and distribution centers, which is extremely
complex and may not meet guest expectations for timely and accurate deliveries. If we are unable to attract and retain
team members or contract with third parties having the specialized skills needed to support our omnichannel efforts,
implement improvements to our technology in a timely manner, allow real-time and accurate visibility to
product availability when guests are ready to purchase, quickly and efficiently fulfill our guests orders using the fulfillment
and payment methods they demand, or provide a convenient and consistent experience for our guests regardless of
the ultimate sales channel, our ability to compete and our results of operations could be adversely affected. In addition,
if Target.com and our other technology systems do not appeal to our guests, reliably function as designed,
or maintain the privacy of guest data, or if we are unable consistently meet our brand promise to our guests, we may
experience a loss of guest confidence, lost sales or be exposed to fraudulent purchases, which could adversely affect
our reputation and results of operations.
If we fail to anticipate and respond quickly to changing consumer preferences, our sales, gross margins and
profitability could suffer.
A substantial part of our business is dependent on our ability to make decisions and effectively manage
our inventory in a broad range of merchandise categories, including apparel, home décor, seasonal offerings, food
and other merchandise. For example, we are investing more of our overall resources, including capital, marketing,
and product development to focus on signature categories, including baby, kids, wellness, and style, and tailor our
food assortment to support guest wellness goals and become more specialized with unique and differentiated items.
Failure to accurately predict constantly changing consumer tastes, preferences, spending patterns and other lifestyle
decisions, emphasize the correct categories, and personalize our offerings to our guests may result in lost sales,
spoilage, and increased inventory markdowns, which would lead to a deterioration in our results of operations by
hurting our sales, gross margins, and profitability.
Technology Investments and Infrastructure Risks
If our capital investments in technology, new stores and remodeling existing stores do not achieve appropriate
returns, our competitive position, financial condition and results of operations may be adversely affected.
Our business is becoming increasingly reliant on technology investments, and the returns on these investments are
less predictable than building new stores and remodeling existing stores. We are currently making, and will continue
to make, significant technology investments to support our omnichannel efforts, implement improvements to our
technology, and evolve our inventory management system, information processes, and computer systems
to more efficiently run our business and remain competitive and relevant to our guests. These technology initiatives
might not provide the anticipated benefits or may provide them on a delayed schedule or at a higher cost. We must
monitor and choose the right investments and implement them at the right pace. In addition, our growth also depends,
in part, on our ability to build new stores and remodel existing stores in a manner that achieves appropriate returns
on our capital investment. We compete with other retailers and businesses for suitable locations for our stores. Many
of our expected new store sites are smaller and non-standard footprints located in fully developed markets, which are
generally more time-consuming and expensive undertakings than expansion into undeveloped suburban and ex-urban
markets. Targeting the wrong opportunities, failing to make the best investments, or making an investment commitment
significantly above or below our needs could result in the loss of our competitive position and adversely impact our
financial condition or results of operations.
6