A recent Article describes how Target transformed from a Retailer with stores in disrepair and leaders that struggled to adapt to changing consumer behavior, to a company that is thriving. Their first quarter results for 2019 beat analysts’ expectations, the store’s private-label lines are exploding, and the stock price is trading at an all-time high.
Target CEO Brian Cornel made a huge announcement in March of 2017 that it planned to invest over $7 billion in a turnaround strategy – Wall Street was not impressed, as Target suffered its largest stock plunge in almost a decade on the day of the announcement. But Mr. Cornel took a page out of Jeff Bezos book and pushed forward on a plan that included:
- Remodeling existing stores (and opening smaller ones in urban areas)
- Introducing new, private label brands; and,
- Enhancing its digital shopping experience.
The article above describes the three pillars of their transformation success:
- Think long term. I believe this is the biggest contributor to their transformation success. “We’re investing in our business with a long-term view of years and decades, not months and quarters,” Cornell said at the time. Another significant contributor was the courage to shift from a traditional shareholder value view to a Stakeholder Value View.
- Leverage your strengths. While Amazon and Walmart were years ahead of the curve, Target execs knew that although e-commerce was popular, the majority of retail shopping still takes place in physical stores. Target focused on maximizing its strengths by turning physical stores into mini warehouses. Known as ship-to-store, this makes it possible for customers to order a product online, then pick it up in a store on the same day.
- Fill a gap. Target delivered products and style that were affordable – yet a step above those offered by competitors like Walmart. In an effort to rebuild its reputation, Target doubled down on its exclusive brands. The company has launched 20 private-label lines over the past three years, including brands for modern-furniture, kids’ clothes, electronics, and home goods.
Transforming is not a singular event. Rapid shifts are likely, driven by the convergence of scenarios that emerge sometimes overnight. Taking the long-term view allows us to see the shifts at some level and positions an organization for continuous transformation. But it requires a mindset shift. Target changed the way they thought about the true stakeholders in their ecosystem – and they are reaping the rewards.