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Cornell revamps Target model

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The most startling transformation in the mass retailing community is the metamorphosis at Target, a retailer that is shedding every facet of the company it once was, replacing it with a new model in which its only link to the old is its name.

The most startling transformation in the mass retailing community is the metamorphosis at Target, a retailer that is shedding every facet of the company it once was, replacing it with a new model in which its only link to the old is its name.

Consider that Target, after committing itself to becoming Canada’s most important retailer, suddenly reversed that position and withdrew from that country, losing billions of dollar in the bargain.

Consider that Target has decided, after years of indecision, to withdraw from the prescription drug business, choosing to sell that business and its related immediate-care health facilities, to CVS, a retailer whose name will shortly begin appearing over Target’s pharmacy counters.

Consider that Target has begun rolling out Target Express stores, units of 20,000 square feet and smaller whose primary appeal is one of convenience, as opposed to the Target discount store’s primary draws, those of price, assortment and merchandise ­quality.

Consider that Kathee Tesija, until recently viewed as Target’s primary merchant, has suddenly left the company, amid an announcement that she will remain involved in an advisory capacity. The question emerges: Is this Target’s loss, or Tesija’s? Or both?

The question "What’s going on here?" is easily answered. The more imposing question is this one: What’s Target’s new chief executive officer up to?

By all accounts, Brian Cornell is an extremely capable executive. He has acquitted himself admirably in a variety of positions, most notably at Walmart’s Sam’s Club unit and at PepsiCo, his most recent post before leaving to become Target’s CEO a year ago. He’s not given to frivolous decisions or hasty directional changes.

At the same time, there’s no question about Target’s recent fortunes. However ambitious its decision to enter Canada, its entry was a succession or missteps, arrogance, lack of coordination and, some say, disdain for the Canadian consumer, crimes which in Target’s past would have been unthinkable.

As for its decision to sell off its pharmacy business, it is a business with which the retailer was never truly comfortable. Target is many things, but it has never fully grasped its role as a pharmacy retailer, preferring instead to emphasize such strengths as apparel, home goods — and private label. Even in its two recently opened Target Express stores in San Francisco, pharmacy stood out for all the wrong reasons.

Then, too, the Target Express stores, now rolling out in selected markets, are easy targets for critics accustomed to the retailer’s larger-format stores. What, after all, is their purpose? What role do they fill? What relationship do they have to Target’s discount stores?

And Kathee Tesija? Well, people routinely leave companies for many different reasons. And a new CEO often presages changes throughout an organization. Target, obviously, is no exception.

So let’s rewind this tape and begin again with this premise: Brian Cornell knows what he’s doing. Let’s add a second idea: Target had fallen on hard times. Its sales, earnings and customer counts had fallen. Its fabled customer loyalty was quickly becoming a relic of the past. Competitors were out-gunning the once invincible retailer. Its senior managers, though young, had possibly become too cautious, too tentative, too uncertain. Its future had possibly become too cloudy. Its reputation had suffered through indecision. Its initiatives, when they came, were too boldly executed, especially as they related to Canada.

Viewed in this light, the moves that Cornell has made were more than necessary; they were brilliant. If Canada was a mistake, better to withdraw quickly rather than slowly. If pharmacy wasn’t working, better to divest that category, especially to a retailer whose reputation had been built, at least in part, on pharmacy. And clearly, Target Express fills a need in urban areas, and what retailer is better suited to filling that need than Target, with its assortment of basic everyday ­merchandise.

Thus, Target’s recent moves, rather than made out of desperation, reemerge as brilliant strokes designed to get a world-class retailer back on track, and restore it to its rightful place at the top of the U.S. retailing ­community.

More to the point, this is merely the beginning of Target’s transformation. More dramatic decisions are yet to come — and the retailer that emerges from these decisions will be stronger and more relevant than this retailer has yet been.


ECRM_06-01-22


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