“When I arrived at Target, there was a full evaluation of the business under way, and we worked closely as a team to identify the areas that would differentiate Target and put us on a sustainable path for growth,” he recalls. “At the time, our Canadian business was losing money every day and draining critical company resources. We evaluated every possible option but were unable to find a realistic scenario that got the business to profitability until at least 2021. We made the decision to discontinue operations in Canada, and while it was very difficult, it was the right choice as we considered the long-term interest of Target and our shareholders.”
The bold, decisive action Cornell took in relation to Target’s Canadian operations characterizes his approach to the business. For the strong hand that he has exhibited in guiding the company and his skill in developing a strategic plan designed to ensure Target’s continued relevance in a rapidly changing retail environment, the editors of MMR have named Cornell Retailer of the Year for 2015.
“I followed and admired Target for years, as both a vendor partner and a competitor,” says Cornell, who prior to taking on his current role was CEO of PepsiCo Americas Food and earlier in his career served as president and CEO of the Sam’s Club division of Walmart. “The Target brand has always had an enviable consumer following.
“From the moment I walked in the door, I’ve been impressed by the team’s passion and enthusiasm. Every time I visit a store, I’m reminded that our team members are genuinely proud to work at Target and want to contribute to our success. When I arrived, we committed to putting the guest at the center of every decision we make, and I believe we’ve made great strides in that direction. While we have much more work to complete, I am pleased with the progress we have made.”
Customer insights are the lodestar that guided Cornell and his colleagues as they crafted a road map to transform Target’s business. Unveiled last March, the plan calls for the discounter to cut $2 billion in costs over the next two years; take a channel-agnostic approach to growth; develop new, more flexible store formats that meet the needs of consumers in urban markets; and emphasize the merchandise categories — style, baby, kids and wellness — where the company has historically earned its reputation.
“While we sell thousands and thousands of products at Target, our signature categories are the areas that truly separate us from the competition,” Cornell notes. “We’ve also seen our signature categories consistently outpace our overall business for the last three quarters. Our guests expect Target to really shine in style, baby, kids and wellness, and we’re resourcing these businesses differently — investing in product and in-store presentation, enhancing our marketing, and ensuring we have the right talent leading the charge.”
Another pillar of Cornell’s strategy to take Target “further, faster” is to reassert what he describes as the company’s cultural leadership. In addition to creating a more compelling shopping experience and augmenting its authority as a merchant, the process will involve leveraging its standing as an expert on cutting-edge style and maintaining relationships with leading designers.
“Partnerships like Lily Pulitzer, which created a level of excitement I can only describe as ‘Black Friday in April,’ are just one way we give our guests something they can only find at Target,” Cornell says. “We’ve long considered Target’s product design capability as one of our secret weapons. And our in-house design team is unrivaled across the industry.
“We’ve done extensive work over the last year to reevaluate our portfolio, with an emphasis on increasing quality while continuing to offer the value our guests expect. For example, we’re using materials like real marble in products for the home. In denim, we’re using fabrics similar to what you’d find in a $200 pair of jeans, but at a fraction of the cost. And our guests are taking notice.
“Target’s marketing team also continues to create cultural moments. Our launch of Adele 25, the return of the Wonderful World of Disney and our support of Star Wars: The Force Awakens, are just a few recent examples.”
Wellness is one category where Target’s openness to innovative partnerships is evident. The company agreed in June to sell its 1,660 pharmacies and 80 in-store clinics to CVS Health for $1.9 billion. The deal calls for CVS, the nation’s largest pharmacy services company, to operate the facilities it acquired in a store-within-a-store format. To some, the transaction might seem to represent a retreat on Target’s part from wellness. Cornell sees it differently.
“Our strategic relationship with CVS Health gives Target greater bandwidth to grow wellness as a signature category, and it gives our guests easy access to industry-leading health care services through CVS,” he explains. “The transition is just now getting under way, and we expect all of Target’s pharmacies and clinics to be rebranded within six to eight months.
“In the meantime, Target will continue to leverage our strengths in product development, merchandising and marketing to elevate wellness as a signature category. For us, that will mean making healthy eating, active living and clean label solutions affordable, accessible and inspiring.”
Going forward, consumers will be able to shop Target in a variety of settings that diverge from the traditional big-box discount store. The new flexible store designs, starting at just 20,000 square feet, allow Target to leverage less-traditional, smaller spaces, and assortments are curated to serve the needs of urban shoppers.
“So many of our guests live in cities, and they are looking for a Target experience that fits their busy urban lifestyle,” says Cornell. “By thinking differently about store formats and using digital to supplement and enhance the in-store experience, we can offer a product assortment that’s most relevant for city dwellers.
“The reaction has been really positive in city neighborhoods where we have smaller stores. Guests really appreciate being able to do quick trips without giving up the Target shopping experience. Right now we have 18 flexible-format locations in cities across the country, and we recently announced our first flexible-format store in Manhattan’s Tribeca neighborhood.”
Digital tools are playing an increasingly important role at the company, both in stores and beyond. The retailer is committed to offering consumers a full range of omnichannel options, and using them, in Cornell’s words, “as the front door to all of Target.”
“Mobile is not just a tool for our guests but a way of life,” he notes. “Eighty-five percent of guests start their Target shopping trip on their phone, browsing, researching and building lists. With that in mind, our job is to find new ways to save our guests time and money and make their lives easier, regardless of how they are shopping with us. This ranges from behind-the-scenes flexible fulfillment options like ship-from-store, which helps us get products to our guests faster, to guest-facing initiatives like order pickup. Guests love the convenience of order pickup, and when they come in to pick up their items, about a third shop the store and make additional purchases.
“Cartwheel, Target’s digital savings app, has also been a runaway success. It’s one of the most downloaded retail apps, with 20 million users. For our guests, the app gives them a quick and easy way to choose their own deals from hundreds of options. “Moving forward, we will continue to invest in delivering a truly on-demand shopping experience. We’ve been public about the $1 billion we plan to spend on supply chain and technology infrastructure to enhance our digital channels, expand fulfillment options and improve the overall shopping experience.”
Technology has enabled the retailer to extend its reach around the world. A global version of the company’s website, Intl.Target.com, was launched in October, and the response from consumers has been enthusiastic.
“We know there is excitement and demand for Target internationally — tens of millions of guests outside the U.S. already visit Target.com every year to browse and research products, but previously they were unable to purchase anything,” Cornell says. “By working with third-party service provider Borderfree, we started offering international shopping. In the first two months, guests in 108 countries shopped, with Canada, Hong Kong, the United Kingdom, Mexico and Singapore having the highest number of shipments. Initially our home products were most popular, but toys and electronics became increasingly popular during the holiday season.”
The past 18 months have been a time of renewal at Target, but Cornell would be the first to assert that the progress made on his watch is just beginning.
“Our guests’ needs and expectations have changed considerably, and the key to differentiating ourselves is to gain a much deeper understanding of who they are and how Target can play a meaningful role in their lives,” he says. “Our guests are at the heart of our transformation, and at the center of every decision we make.”
By adhering to that philosophy Cornell and the management team he has assembled have already returned Target to the front rank of the world’s most dynamic and innovative retailers.