Target’s Big Leap of Faith

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\"RRNot long ago, Brian Cornell was appointed Target’s CEO, becoming the retailer’s first CEO hired from the outside instead of being appointed from within the company’s hierarchy.

At any company, when a long-standing practice concerning the appointment of the top-level executive is changed, it usually means there is a lot of repair work to be done at the company. Target is no exception to that.

Let’s take a quick look at four key issues at Target and then see how — or if — Cornell’s experience addresses them.

  1. Initially, and at minimum, Target needs to be certain another disastrous data breach doesn’t mar the upcoming holiday season as it did season. At that time, personal data of some 70 Million shoppers was leaked. Shoppers abandoned Target in droves.
  2. Target needs to move urgently into the new world of omnichannel retailing.
  3. More fundamentally, Target needs to recapture its lost “cheap chic” reputation, which for many years was the underpinning of its success.
  4. Then, there’s the nagging issue of Target in Canada, which is just not going well.

How does Cornell’s experience fit into this hierarchy of repair work that needs to be targeted? Uncomfortably, it would seem, despite his deep resume.

Cornell first emerged in a big way on the retailing scene when he became executive vice president and chief marketing officer at Safeway. There, Cornell spearheaded two much needed initiatives. One was the “Lifestyle” redesign and remodeling of many Safeway supermarkets. The other was the “Ingredients for Life” product program, the chief elements of which were the introductions of Eating Right and O Organics private brands.

Later, Cornell became CEO of Sam’s Club, and later still became CEO of Michaels craft stores. Just prior to joining Target, he was CEO of PepsiCo’s Americas Food division with oversight of the company’s snack-food brands.

Now, turning to Target, if preventing a data breach is Target’s most urgent goal, Cornell’s resume is light in that area. At Safeway, he had oversight of, but that was many years ago and predated newer technology, including mobile devices.

Basically, he has had no experience in omnichannel retailing.

There’s another hole in Cornell’s resume when it comes to cheap chic. It’s difficult to overstate how losing the cheap chic reputation has pounded Target. That reputation boosted sales and profitability by luring shoppers to the store where they were willing to pay a little more because it was a form of value that went beyond price. To recapture cheap chic, much work will have to be done on fashion, apparel and home goods.

As for Target’s new fleet of stores in Canada, they have been floundering by failing to offer shoppers the prices they anticipated and, worse yet, store execution has been so poor that shelves weren’t properly stocked and went empty. Cornell has no experience in Canada and little in logistics.

Beyond those considerations, there’s the curious fact that Cornell was hired at Target after the resignation of Target’s previous CEO, Gregg Steinhafel. He had been CEO for six years, but had been with Target for 35 years. Steinhafel’s tenure was marked by a turn away from some of the marketing elements that had made Target so successful by pumping up consumables. Indeed, many Target stores have become no less than full line, mid-sized supermarkets.

It’s strange that Cornell’s experience is strongest in food retailing and manufacturing. That could mean Target will become even more supermarket-like when the reverse is needed. Cornell will need to stifle his core expertise and turn away from consumables and back to what made Target great.

Of course, a successful CEO doesn’t need to know all the answers to all the issues; a successful executive needs to know how to hire those that do.

So far, Cornell hasn’t made significant changes in the executive suite, apparently preferring to get to know Target’s culture and the people who drive it. However, the need for new talent seems obvious … and urgent.

Target’s board made a great leap of faith in appointing an upwardly mobile and peripatetic executive such as Cornell. Sometimes it’s best to force change by abandoning long practices. Whether the change succeeds or fails, it suggests a new direction.

Does Target’s board have the knowledge to quickly distinguish outcomes and act accordingly? We’ll see soon enough.



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