In his first months as the leader of Target Corp., Brian Cornell headed to New York Fashion Week and met with fashion editors to gauge how well the company has been living up to its reputation as a purveyor of cheap-chic.
He dropped by the offices of the innovative online eyewear company Warby Parker for insight into running a faster-paced organization.
And he reached out to members of the company’s founding Dayton family, whose connections to the retailer had been fading of late, in an effort to better understand Target’s roots.
As the Minneapolis-based retailer’s first outsider CEO, Cornell has spent his first seven months making connections and seeking inspiration far beyond the headquarters on Nicollet Mall. This wider worldview is a big change for a retailer whose executives have acknowledged as becoming too insular in recent years.
“We’ve got to continue to listen and learn,” said Cornell, a former PepsiCo and Sam’s Club executive who now leads Minnesota’s third-largest company. “We’ve got to be externally focused. And we have to make sure we’re listening to feedback.”
Now Cornell is putting together everything he has gleaned to prepare for the most highly anticipated moment of his tenure thus far. On Tuesday, he will stand before a room of Wall Street analysts in New York and unveil his plan to get the groove back in Target’s step.
Already, Cornell has pulled the plug on the money-losing Canadian division, the retailer’s first international foray. But other challenges remain: Store traffic has been declining, and sales have been flatlining amid competition from dollar stores, Wal-Mart, Amazon and fast-fashion retailers such as H&M and Forever 21.
The company has built some momentum in the last two quarters, however, sending its stock to record highs. In fact, it reported its best growth in same-store sales in nearly three years last week. But Cornell and his leadership team are not high-fiving yet — and, for that matter, are not promising any overnight miracles.
“We’re making some strides,” Cornell said. “We’ve got a long way to go.”
Some changes are already evident. Not only has Cornell been more willing to look outside the company for ideas, but he’s also taken on a much more public role as spokesman for the brand. Previous Target CEOs tended to be less visible.
Despite being up all night checking out stores in New York on the eve of Black Friday, Cornell swung by Good Morning America in the morning for an interview. He also has been more visible around Target’s headquarters, whether it’s grabbing lunch in the cafeteria or holding town meetings as he did after he announced the decision to exit Canada.
“It’s different for us,” said the company’s chief financial officer, John Mulligan, who became a more vocal voice for change as interim CEO before Cornell arrived. “We grew up as a company with this Midwestern humility or whatever it was. Then it might have turned into arrogance. … Brian has been refreshing that way.”
Sitting in his 26th floor office at the Nicollet Mall headquarters, where 10,000 employees work, Cornell sat down for an interview with the Star Tribune last week and laid out what Target will stand for.
For the mass merchandise retailer, choosing a focus has not always been easy. In recent years, analysts say Target had begun to lose ground by focusing too much on competing with Wal-Mart on price and in expanding its ho-hum grocery offerings.
Cornell doesn’t want to dwell on things like light bulbs.
“We like light bulbs,” said Cornell, who celebrated his 56th birthday last week. “But we’re not going to be famous for selling light bulbs.”
Going forward, Cornell said Target will hang its hat on those things that made it famous to begin with and that customers say they want — stylish apparel, home goods and beauty products. The retailer will aim to win with mothers by doubling down in its baby and kids departments. And it will try to win more health-conscious consumers by offering more organic and natural products, which means an upcoming makeover of its grocery department.
The new focus also means turning down other ideas no matter how good they may be.
“Setting priorities means that we have to say no — and say no more often,” Cornell said. “We’ve got to make sure we’re focused on the big things that are going to create the transformation we’re looking for as a company.”
Departure from Canada
The most prominent pullback, of course, is Canada. When Cornell first arrived at Target, he thought he could salvage the retailer’s 133 stores up north, even though they were hemorrhaging hundreds of millions of dollars. By January, he decided to give up.
Cornell says leaving Canada was the biggest decision of his career to date. While he insists it was the right choice, it was one he was loath to make.
“I like to operate things — I like to transform businesses,” he said. “I like to win.”
On Tuesday, Cornell will flesh out the details of his big plan. He’s already been talking about general themes for months: boosting Target’s digital prowess, rolling out more small format stores such as CityTarget and TargetExpress, localizing stores and cutting costs.
“It’s a very important and significant recast of what Target needs to do,” said Douglas Baker, a Target board member and the CEO of St. Paul-based Ecolab Inc. “Of course, it’s not all new. It never is. But that doesn’t mean it’s not important and won’t make a big difference.”
As hard decisions are made, more job cuts could follow. Pulling out of Canada resulted in about 17,600 employees in Canada and another 550 in Minneapolis losing their jobs.
New ways of operating
With Canada no longer on the table, Cornell wants to win in the United States. But to do that, Target not only needs to focus its offerings. The company also needs to change the way it operates.
Cornell calls it “ridding the organization of undue complexity.” In layman’s terms, it means cutting out the layers of bureaucracy and decisionmaking by consensus that made Target slower to react and more cautious in recent years.
It’s one reason Cornell met with the leaders of Warby Parker in New York, where he learned about how they vet ideas and quickly bring them to life. It was the first time a CEO of a big-box retailer had come to see the company’s offices, said Neil Blumenthal, the firm’s co-founder.
It was inspiring, Blumenthal said, “to see and watch an executive like that who is as passionate as any entrepreneur founder that I’ve met and that is eager and driven to move as fast as a small, nimble tech start-up.”
Target has already made some progress in its quest to move faster. In October, top leaders gave the go-ahead to a proposal to offer free shipping on any size order during the holidays. The idea was approved in about three days, said Mulligan, the CFO. “There wasn’t hemming and hawing and 15 people in the room.”
It was the same with Target’s recent decision to lower its free shipping threshold year-round to $25 from $50.
Innovation, Cornell often remarks, has been a part of Target’s DNA since its inception. That’s something he’s learned about firsthand from speaking to the Daytons, the family that launched Target as an offshoot of the Dayton-Hudson department store business in 1962.
In November, Cornell met three generations of the Dayton family at a cocktail reception for Cornell and his wife, Martha, at the home of Eric Dayton, who owns the Askov Finlayson men’s shop and the Bachelor Farmer restaurant in Minneapolis with his brother Andrew.
Gov. Mark Dayton was there, as was his father, Bruce Dayton, who is 96 and was the last member of the company to be actively involved in running Target. He retired from the company’s board in 1983.
Cornell shared a couple of private moments with the eldest Dayton, who gave him three books he has written about Target’s history and his family.
“There was something about the passing of things that was really pretty powerful,” Eric Dayton said.
Cornell was touched. And he read the books soon after.