Target catches the Pepsi spirit with new CEO hire
Target has found its new chairman and CEO and, as expected, the retailer went outside the company for the first time to fill the position. Brian Cornell joins the struggling retail giant from PepsiCo, where he most recently served as CEO of the company’s Americas Foods division. He also has retail experience serving as CEO of Sam’s Club for three years and holding the same position at the arts and crafts retailer, Michael’s, for two.
Target’s issues are well known, including suffering a huge data breach last year, continuing losses in Canada, tepid same-store sales comparisons in the U.S. and a corporate culture in crisis. An email sent by a Target employee and published on Gawker in May said the company was "in desperate need of help, direction and vision, starting from the top down."
As the man at the top, Mr. Cornell has a big job ahead of him. In his first official statement, he said, "I am committed to empowering this talented team to realize its full potential, lead change and strengthen the love guests have for this brand. As we create the Target of tomorrow, I will focus on our current business performance in both the U.S. and Canada and on how we accelerate our omni-channel transformation."
The Wall Street Journal reports that Target is leaving open the president position. An article on the paper’s website speculates that perhaps that job will go to Kathee Tesija, the chain’s chief merchandising officer, who is viewed as future CEO material at the company.
- Target Names Brian Cornell as New Chairman of the Board and CEO to Lead Company’s Transformation – Target Corporation/Business Wire
- Target Picks Pepsi Veteran as New CEO – The Wall Street Journal (sub. required)
- Target Headquarters "In Desperate Need of Help," Says Employee – Gawker
- Target’s CMO: ‘The truth hurts’ – RetailWire
- Should Target cut and run in Canada? – RetailWire
Discussion Questions
What do you think of Target’s choice of Brian Cornell as its new chairman and CEO? Is there any danger in Target naming Mr. Cornell both chairman and CEO? What do you see as the most critical challenges he faces as he steps into his new job?
Some of the initial reaction I’ve read pushes back on Mr. Cornell’s Pepsi background, ignoring the time he has spent at retailers like Sam’s and Michaels. The real question is whether he can shift the spotlight back onto apparel and home decor—always Target’s “calling card” for brand differentiation—and away from food and consumables. His background raises a caution flag, but with luck the Target board identified somebody with the leadership and strategic skills that the company needs right now.
I think it will be good for Target to have a CPG/retail veteran who can pump some fresh ideas into Target. Although, one might say why not have a pure retail veteran, I think that things are changing so fast for retail, that having retail-only experience may now be a detriment. Brian has a solid background in each. Now how smart he is about technology will be the clincher. He is smart enough to have the right people on his team and will do a good job.
Mr. Cornell’s leadership background is strong in retail (Sam’s Club, Michaels) and CPG (Pepsi) which prepares him well for consumer expectations as well as internal/organizational priorities.
Given the necessity of reinstituting and invigorating the Target brand, that path may be easier and allow for agile decisions with Mr. Cornell holding both chairman and CEO roles.
The most critical challenges ahead are regaining the internal confidence of the merchants, bring physical and digital strategies (product, IT) together and most importantly, asserting Target’s unique brand mojo once more, and consumers’ trust in that brand.
Target is a very large company with horrifying leadership, corporate and structural problems that are not slowing, or even clearly understood by the company’s board of directors. This is demonstrated by the weak measures put in place that do not halt the growth of the existing problems or the development of new ones. Adding to the misery and total lack of stability is the company’s attempt to redirect public and internal attention from the seriousness of these issues.
Mr. Cornell will find it difficult to get a handle on the core issues from his new support team, and his lack of experience in corporate repair and revitalization leaves him with little-or-no outside resources to call upon for help. This leaves corporate withdrawal as the best tool to combat losses for issues like the Canada problem. As for other issues like the information technology crisis, the new leadership will most likely be forced to throw money at the problems, hoping they really do go away by themselves over time. Adding to the issues at hand is the fact that there will be a need to learn this new business within the next 90 days to effectively anticipate and communicate to the near- and long-term needs of the company. More time than that to acclimate will aggravate the hot zones within the company’s pile of problems. The next year-to-18 months might be make or break for the company as we now know it.
Mr. Cornell’s greatest challenge will be to break the triangle of troubles, tribulations and catastrophes that three previous Walmart alumni instituted at Kmart, Fleming and SuperValu.
Most employees and other folks want Target to become vibrant again, particularly the Target board, which has a track record they need to disguise. Target, that chic and inviting girl from Minneapolis has become average and quite confused. Brian Cornell’s task will be very demanding.
To deal with their challenge the Target board had Brian Cornell searched out. There are, of course, bubbles of value in his soda pop management experience and his five combined years at Sam’s Warehouse and Michaels. But after its vetting, is the Target board totally convinced that Mr. Cornell has a merchant’s magic and the focus and perseverance to make Target dynamic again?
Are Mr. Cornell’s eyes clear-sighted and visionary, his brain tough and insightful, his determination undaunted and sufficiently uplifting to reverse and correct the sins of management and the board of the past decade? We should pray for the best and stay prepared the worse. Good luck, Mr. Cornell.
Brian Cornell will face a litany of challenges as he takes the helm at Target, not the least of which will be the need to evolve the corporate culture. It’s likely that the board viewed his outsider status as an asset in this regard.
Reports so far seem to downplay his experience as CMO at Safeway—a tenure that lasted from 2004 to 2007. Ten years from CMO to Chairman is a pretty brisk career pace.
With both consumer brand and retail experience at the highest levels, he seems like a logical fit for a company like Target. Naming him chairman as well as CEO may be a clever decision, since the pressure will be on early to make internal and customer-facing changes. With his CEO hat on, Cornell may need to count on a period of forbearance from his Board.
What I like about the Cornell hire is that he also has grocery in his background with Safeway. Which to me, aside from security issues, is one place where Target could really, really improve and make some pretty big volume leaps.
He should know how to do that! I’d bet on the upside.