Target's Coupon Mess Fixed; More Details Emerge On What Happened

As I noted about a week or so ago, Minneapolis-based Target Corporation has been accused of shortchanging its customers across the US since at least August by only partially crediting certain manufacturers' coupons at checkout time. The company couldn't (or wouldn't) explain why the problem was happening (it vaguely blamed a computer glitch) or why it was taking so long to resolve; it only would say that the problem was going to be fixed soon.

Well, this past Saturday, news reports came out like this one at the Chicago Sun-Times saying that Target had told its 1,754 stores in 49 states to begin hand-processing coupons, and promising a permanent fix within ten days.

Then this past Tuesday, Target made a surprise announcement that the coupon problem had been fixed. Target declined to say much more on the subject, the Minnesota StarTribune reported, including "whether it collected any unredeemed coupon money and how it was accounting for any surplus." Target's press releases on the subject have been noticeably absent as well.

A bit more light was shed on the episode today in a "behind-the-scenes" story at StorefrontBacktalk.com. This interesting story claims that it cost Target possibly as much as $5 million in extra labor costs to manually process coupons over the weekend. That's a pretty good incentive to speed up a computer fix.

In addition, it looks like not only did Target shortchange some customers on some of their coupons, it credited some customers too much on others.

Furthermore, the "computer glitch" apparently was related to a fraud/security improvement in Target's custom point-of-sale (POS) software. There seemed to be a worry by Target's management that some customers could (or had) figured a way to use coupons to get credit they were not entitled to get. So Target created new business/IT rules for coupon redemption that ended up backfiring when they were implemented.

I should note Target has been hit by organized coupon fraud in the past, so management's concern wasn't unreasonable.

The StorefrontBacktalk.com story also notes that the coupon redemption problem originally emerged in early summer, but it took until August before Target corporate realized that it had a systemic issue. Early customer complaints at local stores weren't specific enough for a pattern to emerge until later. That pattern also became clearer to Target's management earlier than might have occurred because bloggers and social media began writing about the issue.

I guess that is one good reason for companies to monitor social media web sites.

The StorefrontBacktalk.com story went on to say that:

"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."

The StorefrontBacktalk.com story looks well-sourced, and it is worth a read. It has a nice explanation about why Target may not be able to easily account for any coupon/customer discrepancies, too.

Now why Target felt it couldn't tell this story publicly itself is a mystery to me: looks like a fairly common IT issue to me.

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