Table of contents
I had not planned to write an article detailing my thoughts on Target’s recent CEO change because I didn’t think I had anything new to say that I had not been saying for the past three years. Little did I realize though, upon reflection and after encouragement from many social media followers and past work colleagues, that the Cornell part of the story is far from over. So I changed my mind.
Net/net – the events of Wednesday morning say far more about Cornell than they do about his successor, Michael Fiddelke.
I will start off today with a personal story.
For those that may not know, I was a Vice President at Target for a number of years. I lead Home Furnishings for Target.com and soon after was named Target’s first omnichannel merchant in 2016. By that, I mean had joint P&L responsibility for stores and dot com. I then went on to become the head of Target’s Store of the Future project, which was, when all was said and done, a nearly two year attempt to answer the question, “In the future, why will people still come to a Target store to shop?”
Feels like a pretty important question to answer, right?
Well, it did to me too. Leading the project was the most rewarding experience of my professional life, but then one day, while driving into the office, I got a call informing me that the entire innovation portfolio had been shut down. I had to lay off my entire team and then decide if I, too, wanted to stay or go. Ultimately, I made the decision to resign, and I have never stated publicly why.
Until now.
The Canary In The Bullseye
Brian Cornell, with the backing and support of the board, had shut the door on innovation, deciding instead to invest $7 billion in fortifying the stores and improving upon what they thought Target did well already, only better. The stated public rationale at the time was to pick up share while other retailers died off.
Or, as I like to call it, growth through death. If it doesn’t sound inspiring, that is because it isn’t.
It is also antithetical to Target’s own history. You see the funny thing about this argument is that had Target’s founders, the Dayton Hudson Corporation, taken the same approach, Target would not exist. Target was birthed because it was an attempt by the visionary leaders of Dayton Hudson to disrupt itself. It was a portfolio bet, plain and simple. Target started as an experiment. Target was an innovation. Target was something that grew into something that likely very few people envisioned it would ever become at its outset.
So I left. I resigned. I could not be inspired by a leader that didn’t believe in innovation, knowing deep down that at some point Cornell’s ability to kick the can down the road would come to roost.
The canary had run headfirst, right smack into the center of the vaunted Target Bullseye for me.
It’s Better To Be Lucky Than Good
Then a funny thing happened between 2017 and Wednesday . . . the pandemic.
All of a sudden Cornell looked like a hero. Sales took off, Target’s stock reached an all-time high, and it felt like every month Cornell was on CNBC taking a victory lap.
Yet, the whole time I was left wondering why. What new strategies had Cornell put into place to warrant Target being appreciably so much more valuable coming out of the pandemic than it had been going into it?
It, for sure, wasn’t “the billion dollar” owned brands he was creating because, newsflash, Target has always invested in owned brands, and many of the so-called “billion dollar” brands on which Cornell was taking victory laps were just reskins of brands that existed before. The strategy was nothing more than good marketing spin.
No, at the end of the day, I could not name one concrete long-term differentiating growth strategy then and still cannot name one now, either.
The best analogy I can use to relay what was going on during the pandemic is that Brian Cornell and Target were like a novice blackjack player. You know the type, the unwitting soul that splits tens and then feels like a winner when the dealer busts. The pandemic was the dealer busting. Cornell and Target couldn’t help but to do well from 2020 to 2022 because people only had so many places to shop, and, when they actually did go out to shop, they wanted to spend as little time shopping as possible, so naturally they gravitated towards one-stop-shopping.
But luck isn’t a strategy.
What Good Cornell Had Just Ain’t That Good
There’s a saying that I like. I think I first heard it from Scott Van Pelt of ESPN fame – “How good is your good?” It is entirely apropos to this situation.
Take a look at the below graph which originated from CNBC and that I later appended with the nice yellow rectangle. It says everything you need to know about luck vs. solid strategy and execution.
The data is pretty compelling. Prior to the pandemic, Target’s growth was coming from digital as the organization finally got wise to Amazon and had nowhere to go but up, provided the right strategies were in place. I was a part of this pre-pandemic digital growth heading up Home, so I know what was driving it. It wasn’t Cornell. It originated from the strategies of many great folks that were brought in long before Cornell and many of whom have since left.
The real issue that the graph highlights is in store performance over the pre-pandemic period and beyond. As I said above, over the same concurrent timeframe, $7 billion went into stores. Yet, from 2016 through 2019, stores were barely keeping pace with population growth plus inflation (my shorthand way of saying a ballpark of 2%), despite this also being a window of time when numerous retailers were going out of business. So, call me crazy, but how was growth through death actually working?
That’s right. It wasn’t.
The pandemic happened and clouded everyone’s vision. Sales skyrocketed to ridiculous, never seen again levels between 2020 and 2022, but then, after the pandemic, both stores and digital fell off the table ever since. If the strategies were solid before or during the pandemic, these results shouldn’t have happened.
And, again it all goes back to Cornell because, under his leadership, Target has never had any long-term differentiating growth strategies in place.
I was one of the first to point this looming issue out. I started talking about it late in 2022, first on a podcast that aired on November 17, 2022. Here’s the link (go to minute 10:00). In discussing the cessation of Target’s small store strategy (another Cornell idea, by the way) and assessing the resulting Target financial outlook, my exact words were that small stores were always “a road to nowhere” and that, without anything else to bank on,“we have seen the height of what Target can be.”
That was 2022, and all that has happened since then is that Target, as predicted, has never reached the same revenue levels that it did that year, I am now bald, and the two events could possibly be correlated because the whole situation makes me want to pull out what little hair I have left.
And Then Things Got Worse – They Crossed The Streams
A lack of growth strategies is one thing but operational hiccups are something else entirely.
Target has also shot itself in the foot multiple times. The leadership hasn’t managed its stance on DEI well; it has dragged its feet (and remains half pregnant) on its return to office policies; a major partner and comp driver, Ulta Beauty, just backed out of its relationship with Target; brand standards in stores have been relaxed (e.g. no more red and khaki and when was the last time a Target sales associate asked, “Can I help you find something?”); and last but not least, pee catchers.
Yes, pee catchers.
I bring this up to lighten the mood but also to point out that over my dead body would pee catchers (aka the little rugs around the toilet) have ever made their way into a seasonal holiday assortment when Target was its “Tarjay” best. And, I say this because my boss at the time legitimately said he would fire me if I tried to bring them into stores back in 2005 when I was buying the very same category of product shown in the picture above..
When we step back, the net result of this massive confluence of streams is uninspiring merchandise, more pictures than I can count of empty shelves on social media, store associates that feel overworked, and customers who are pissed off, and rightly so, for all three of the preceding reasons.
It all happened under Cornell’s watch. Which is why, for my money, Cornell will go down as the worst CEO in Target history.
But It’s A ‘Brand New Day’
Alright, enough about Cornell, let’s talk about his successor, Michael Fiddelke. To say the man inherited a dumpster fire is an understatement. The situation in which Fiddelke now finds himself is second only to whomever assumes the next lead role at Kohl’s.
I don’t know Michael that well. He started at Target about one year ahead of me, and we were both VPs around the same time. I had a few meetings with him. He seemed sharp. But my firsthand observations are limited to make a personal assessment, so I can only go off the resume.
And, I will just come out and say it. I worry Fiddelke is the wrong pick. I have never in my life pulled my punches and am not about to start now. Internally he likely is the best candidate but internally is more of the same. The board should have looked externally. All of which leads me to ask – Why? Why did the board do this? How feckless can they be?
Enter Cornell again. Because no matter how hard I try, he just pulls me back in.
The most interesting aspect of Wednesday’s announcement is that Cornell is staying on as executive chair of the board. Why would the board allow that to happen? And, more importantly, why would Cornell want to do that? My intuition, having studied Cornell as I have for the past eight years, is that Cornell wants someone else to share the load of his failure. By assuming the role of executive chair and then installing Fiddelke as CEO, it creates shared accountability, and shared accountability plays much better when discussions of legacy are involved. It’s cunning with a capital “C.”
Worst.Target.CEO.Ever
So What Happens Next?
Let’s look at the various options around what might happen next. Let’s do a little scenario planning. The way I see it there are four potential paths that emerge.
One, I eat crow and Fiddelke does a great job. Two, Fiddelke is fired in two years. Three, the business goes from bad to worse over the next three to six months, and the Street, already unhappy with the move, pushes the board to oust both Cornell and Fiddelke, and the board then names an interim CEO and commences an executive search. Four, the board continues to remain blind to all the issues laid out above and Target finds itself in the crosshairs of an activist investor.
Options #2 through #4 sure as heck aren’t pretty, but sadly, if I were a betting man, option #1 also likely has the longest odds of the four.
With that said, Fiddelke clearly has his work cut out for him. I wish him the best of luck and hope he proves me wrong. If only Cornell would just go away and give Michael the chance to prove his mettle. The strategy is simple — growth via proverbial death. Cornell needs to do just that. Be a real leader, resign his board role, and step out of the picture altogether to let Fiddelke show his stuff.
It is a simple strategy. One Cornell has even espoused in the past. However, nothing in Cornell’s history gives me confidence that Cornell will be the leader Target needs to execute it correctly.
About the Author
Chris WaltonChris Walton is the co-host of Omni Talk Retail and a former Target executive. This analysis draws from his commentary on the Omni Talk Retail Fast Five podcast.
Omni Talk® is the retail blog for retailers, written by retailers. Chris Walton and Anne Mezzenga founded Omni Talk® in 2017 and have quickly turned it into one of the fastest growing blogs in retail.