Target is ending its Cartwheel Perks rewards program, promising something better

Key Points
  • Target has been testing its Cartwheel Perks loyalty program for about a year in five markets.
  • Now, Perks is coming to an end.
  • Existing Perks users have until Aug. 27 to earn Perks points, and must make selections of what they want to redeem by Sept. 27.
Shoppers outside a Target store in Mount Kisco, New York.
Scott Mlyn | CNBC

Target is ending its Cartwheel Perks loyalty program.

The retailer sent the following e-mail to users in the five Perks test markets on Wednesday:

"Creating simple, convenient and fun digital tools for Target guests means listening carefully to guest feedback and regularly making adjustments based on what we hear," Target told CNBC. "That's why we've begun phasing out the pilot Cartwheel Perks program."

Cartwheel Perks allowed Target in-store shoppers to accumulate points each time they made purchases. After reaching a threshold, users could then redeem points for items such as apparel, food, water bottles and sunglasses.

The pilot launched in September in Denver, Houston, San Diego, St. Louis and Raleigh-Durham, North Carolina.

Existing users can still earn points until Aug. 27 and must make selections of what they want to redeem by Sept. 27, Target said.

"We had many learnings about how to engage and reward guests that we plan to leverage in the future," Target said about the pilot. "We look forward to sharing more about exciting changes coming soon to the Cartwheel and Target apps."

Target, meanwhile, is planning to make other changes to its main app, like adding maps that show shoppers when they're close to deals in stores. Target is also rolling out a mobile payment option for its REDcard credit card holders.

Loyalty programs, like Perks, have been one way for retailers to combat declining foot traffic at brick-and-mortar locations of late. The freebies serve as incentives to drive shoppers to stores, especially when purchases must be made at physical locations, not online, in order to earn rewards.

Other names like Dick's Sporting Goods, Kohl's, Sephora and American Eagle also boast popular rewards programs.

To be expected, loyal Target customers were not happy after hearing about the phasing out of Cartwheel Perks.