Keep in mind that the majority of Target guests do not actually use the Target app. Not all smartphone users want to use an app at each and every store where they do business. Some smartphones have limited memory capacity, and not every smartphone user wants data on their personal spending patterns tracked via cellphone. The phone number and text message approach still tracks spending patterns but is seen as less intrusive. You do raise really good points about encouraging use of the app - but America is a free country (unlike China) and if we demand that "our guests need to get with the times!" in order to buy a loaf of bread or package of toilet paper from us those guests will shop elsewhere.
The irony in all of this is that anyone using a debit card or credit card is in fact leaving a data trail of their purchases with Target even if they opt out of Circle, the App and the RC. That's why the service desk can easily process no-receipt returns by having the guest insert their payment card into the card reader, then scanning the item to determine if it shows up on their receipt history. The only way to be "under the radar" at Target is paying with paper currency and coins, and forfeiting the benefits of our rewards plans.