First things first: Brian Cornell has been an incredible CEO at Target for most of his time leading the retail chain since he joined in 2014. People forget how lost Target was a decade ago and what Cornell did to rebuild the company and turn it into perhaps the best retailer in America for much of his stint. But that was then…and this is now. Whatever he accomplished — and granted it was a lot — is history at this point and the company needs to bring in a new leader who will do the kinds of things Cornell did during his first few years at Target. And it needs to do this now.
Finding the next Brian Cornell will not be easy. In September 2022 when things were still pretty good (comparatively), Cornell signed for three more years on the job. That’s why the idea of a successor coming before the end of the year is not implausible.
Target Practice
If you’ve been paying even the slightest bit of attention you don’t need to be reminded of the long litany of problems Target is dealing with these days. Operational issues seem to create perpetual — and unacceptable — out-of-stocks in all the stores. Tired merchandising ideas that may have looked good on a spreadsheet have rarely held up in the stores. Of course, the DEI controversies seem to consume Target management no matter which way they try to get out of them
Target is a mess. Its stock is down 40 percent since the start of the year and even worse, 50 percent, since this time a year ago. In the meantime, Cornell seems to be roaming the halls of Minneapolis headquarters, and when he can finally find someone there (according to vendors the company has one of the worst back-to-office rates of any retailer in the country) he’s looking for scapegoats.
The latest target is Christina Hennington, a 20-year Target lifer who was chief strategy and growth officer and who some people thought was on the shortlist to get Cornell’s job at some point. She hasn’t been the only one who has appeared to have been pushed out, but certainly, she was the most prominent.
Getting bumped up was COO Michael Fiddelke who will now head what is being called the “enterprise acceleration office” which sounds suspiciously like a Musk-ian DOGE initiative put in place by the current Trump administration. And if you’re thinking “enterprise acceleration” is something that the CEO should be doing, you’re not alone.
In the meantime, Cornell keeps saying Target needs to be better but doesn’t seem to be taking much responsibility for the current predicament the company finds itself in. In a recent infamous letter to employees (it really is time to get rid of this disingenuous “team member” thing, don’t you think?) Cornell did a non-mea culpa and said everyone must do better. We assume that includes him though you wouldn’t necessarily know it by the language he used.
Retro Target
When Cornell joined Target in the summer of 2014, he was 55 years old and had spent a decent part of his career in the food and grocery business. He was CEO of PepsiCo’s America Foods operation overseeing Frito-Lay and Quaker Oats among other famous names. Before that, he was largely on the retail side, running Sam’s Club and prior to that, Michaels.
Even as someone who might not have been on everyone’s bingo card as the successor to Gregg Steinhafel and the first outsider to run the business going all the way back to its founding as a startup at Dayton’s Department Stores, he brought a good working knowledge of big box retailing and specifically groceries, an area in which Target was increasingly falling behind its closest competitor Walmart.
To be polite, he inherited a massive trainwreck when he took over. Ironically it was every bit as daunting as the current dilemma the company finds itself in. Its merchandising had become stale and safe with too many legacy brands that were no longer exemplifying its positioning as the cheap chic place to shop. Then there was Steinhafel’s ill-fated move into Canada, buying up the leaseholds of 220 Zellers stores with the aim of converting about 100-150 into Targets. In the process, he helped make Hudson Bay Co. owner Richard Baker even richer and look even smarter — one of which was way easier than the other.
In theory, moving north made a lot of sense, Walmart had done it with great success but apparently, everyone forgot to read the small print. The Zellers stores were too small, too old and too out of the way and Target’s one-size-fits-all North American merchandising strategy was a disaster.
And then there was the massive data breach that hit an estimated 40 million credit card holders. They weren’t the only big company whacked with this kind of thing but the way Target handled it is classic Harvard B-School Case Study material (assuming Harvard stays in business).
Super Brian Cornell
In 2014, once he located his parking space and figured out the name of that dog mascot (you know, Bullseye), Cornell got to work. Fewer than six months on the job, he shut down Canada taking a massive $5.4 billion hit but figuring that was nothing compared to what it would have taken to turn around the operation up there. To expand what was still a sub-par ecommerce business, he bought Shipt, the same-day delivery service, which turned out to be even more valuable during the pandemic of the early 2020s.
On the merchandising front, he 86’d many of the dusty private label programs, replacing them with fresh names like Joanne Gaines of Magnolia Home and a big Disney exclusive program. He signed a deal with Ulta for shop-in-shops strengthening a perennially weak classification for mass merchants. On the food side, he expanded Target’s private label offerings and worked to apply its cheap chic positioning from general merchandise to grocery, CPG and HBA assortments.
While all of this was going on, Cornell made what many view as his most brilliant move: With massive spending outlays in the works and a lot of markdowns about to hit, he went to Wall Street and essentially said, ”Hey, listen, fellows, our stock is going to suck for a while and you’re not going to see a whole of improvement in our financial performance for at least a year or three. But be patient.” As those who loathe surprises, investors cut Cornell a bunch of slack and didn’t punish Target in what could have been a very ugly time as Cornell took the long view and played out his long-haul strategy.
We all know what happened next. Target started improving and then it really started improving. Its stores looked terrific, full of exciting, on-trend products, marketed through trendy TV commercials and great branding. Target stock, which was floating around $61 a share when Cornell arrived went as high as $260 and change in the spring of 2021.
In hindsight that appears to have been the high-water mark; the past four years have shown a slow and mostly steady slide down to its current level at just under $100 a share. Walmart’s share price essentially doubled over the same four-year period.
Cornell Redux
Finding the next Brian Cornell will not be easy. In September 2022 when things were still pretty good (comparatively), Cornell signed for three more years on the job. That’s why the idea of a successor coming before the end of the year is not implausible.
Who that will be exactly is much harder to deduce. Certainly, if they go with an internal candidate Fiddelke is the guy but the board has to be thinking that these times dictate a more daring choice. Then again after watching the Ashley Buchanan debacle at Kohl’s, they may want to go with a safer choice, somebody they know and trust.
You would think the retail leader CEO bullpen is well stocked with all the recent retail closings. Of course, someone with a tainted track record of being associated with a loser brand is not a great choice either. Curiously the Target board is a little light on retail experience — Safeway and CVS are really the only relevant resumes among the directors. So, if they decide to go outside the Target bench, we might see a dark horse choice, much like Cornell was at 11 years ago. Whomever they choose, here’s the thing: Target needs a Brian Cornell…just not this Brian Cornell.
