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Target’s $5 Million Coupon Fix

November 11th, 2010

One Target IT official said that many consumers had complained to guest services at the stores about the problem, but most of the complaints weren’t specific enough for IT to act on. Well, at least the details that eventually wound their way to headquarters weren’t specific enough.

Reports coming from coupon-oriented blog sites, though, connected enough of the pieces together that IT was able to start attacking the problem. This is an example of how such problems might have taken even longer to identify and fix 10 years ago.

The fix took so long because of the integrated nature of the problem, where any patch could cause unintended ripple effects in 20 other POS areas. And the calendar was also not helpful, with a patch still being finalized in early November and a multi-store pilot of the fix in October.

“This is a really bad time of the year to fix something,” said one Target IT manager.

One key threat still looming over Target is legal, with threats of consumer class-action lawsuits. Those actions are based on two elements. The first would be consumers suing to get reimbursed for the amount of the discount that they were improperly denied.

The problem with that is very few consumers will remember what coupons they presented and for how much. The coupons themselves would obviously have been kept by Target and submitted for processing and reimbursement.

The second element of litigation would put the onus on Target to report how much total additional money it collected from manufacturers, beyond what its POS records said it should have received. The problem is that their records historically are higher than what they receive, so it will be difficult to precisely determine a dollar amount attributable to this problem.

There’s also a level of disconnect between the coupon data and the consumer. Until GS1 Databar kicks in next year on manufacturer coupons, there is very little data collected from the coupons.

POS records would reflect the amount the consumer was discounted, but there’s no practical way to match that with the paper coupon presented to look for any deviation.

Of course, if the consumer notices the shortfall in discount at the time, the cashier can compare the POS record with the receipt. But what was much more commonly happening was the consumer discovering the shortfall hours later at home and, even more often, not at all.


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