Target interim CEO says breach spurred revamp of stores, bureaucracy

  • Article by: MATT TOWNSEND , Bloomberg News
  • Updated: May 31, 2014 - 6:15 AM

“We got a little bit risk-averse in making sure things were perfect,” John Mulligan said.

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Target's John J. Mulligan, testified before the Senate Commerce Committee about recent cyberattacks on Target retail stores and security breaches of consumersí financial information, in March when he was chief financial officer and executive vice president,

Photo: J. Scott Applewhite, Associated Press

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Target Corp. Interim Chief Executive John Mulligan said that even before December’s massive data breach, the retailer had lost its way by becoming too cautious and bureaucratic.

The theft of credit-card data for 40 million customers has forced the Minneapolis-based company to refocus on pleasing shoppers and reconsider everything from how it presents apparel to how it makes decisions, Mulligan said Friday in an interview.

“That came out of it, but I would have preferred to have gotten there a different way,” he said. “We got a little bit risk-averse in making sure things were perfect and we understood the economics. Now, it’s really unshackling ourselves.”

Earlier this month, Mulligan, an 18-year veteran of the second-largest U.S. discount retailer, was promoted from chief financial officer to replace Gregg Steinhafel as CEO on an interim basis while the company searches for a permanent replacement. Target had already been trying to improve lackluster results in the U.S. and a botched expansion to Canada before hackers infiltrated its computer systems.

At a test store in Minneapolis, Target is reworking the baby, electronics, toys and clothing sections because presentations had become stale, Mulligan said.

The changes include opening up floor plans, improving lighting and introducing mannequins, which were used for the first time two years ago with the debut of its smaller CityTarget locations. The remodeled baby area went from initial concept to introduction at 200 stores this summer in seven months, Mulligan said.

“We are accelerating how we make decisions,” by giving design and store teams more autonomy and requiring fewer initiatives to be approved by top management, Mulligan said. “It’s just getting more comfortable putting things out there.”

The moves are all part of an attempt to get Target back to its roots of upscale discounting, Mulligan said. While its design collaborations get a lot of attention, the chain’s ability to apply its “cheap chic” mantra to basic products is what set it apart, he said.

“People equate that with the big designer things,” Mulligan said. “Those are important, but that’s frosting. It’s the everyday innovation. That’s the secret sauce. That was our success.”

Shares of Target rose 1.6 percent Friday to close at $56.76. They’ve fallen 10 percent this year.

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