Abstract

This case discusses the turnaround strategies adopted by Minneapolis-based discount retailer, Target Corporation (Target), to revive its business in the US and revamp its operations in Canada. The retailer was known for its cheap-chic image of offering affordable but stylish fashion and home goods that had won the hearts and wallets of millions of shoppers over the past three decades. But since 2013, Target had been having trouble connecting with consumers. American shopping habits were going through a profound change, as people shopped more online and were looking for huge bargains as they struggled to cope with stagnant wages and higher taxes. This resulted in a persistent drop in traffic at Target’s 1,795 US stores. While Target was grappling with issues in its US stores, it also had to deal with its not so successful international expansion into Canada. In March 2013, Target forayed into the Canadian retail market by launching 124 stores. The Canadian launch had been rocky since it was plagued by supply chain issues. Moreover, customers were unhappy with the merchandise selection and the fact that the products at Target Canada were priced higher than those at other retailers in Canada. To add to the retailer’s woes, a massive data breach took place at Target’s US stores in December 2013 resulting in the hacking of millions of customer accounts. Target’s reputation was tarnished. Subsequently, the Target board asked Gregg Steinhafel (Steinhafel), the then CEO, to step down for his poor handling of the data breach issue. John Mulligan, Chief Financial Officer of Target, took over as the Interim CEO of Target. In May 2014, Mark Schindele (Schindele), a Target veteran, was appointed as the President of Target Canada in place of Tony Fisher. To revamp Target’s operations in Canada, Schindele had to fix issues associated with the supply chain and introduce a new price-match policy that would enable customers to compare the prices of Target’s products with those of other retailers such as Amazon, Best Buy, and Wal-Mart. He also had to improve merchandise selection at the Target Canada stores. To arrest the decline in its sales and improve customer traffic at its US stores, the Target board brought in a transformational CEO. In August 2014, Target appointed Brian Cornell (Cornell), former executive at PepsiCo (Pepsi), as its new CEO. Cornell faced the Herculean task of helping Target regain its lost momentum at its US stores by driving customer traffic and going back to its cool image of a cheap-chic destination for fashion and home goods in the rapidly changing retail landscape. He also had to enhance Target’s lagging digital strategy since most of the consumers were doing their shopping online. With all these issues, it remained to be seen whether Target could revive its sluggish sales in the US and regain its lost momentum and turn its loss making Canadian operations into a revenue-generating business model.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Examine some of the reasons for the problems faced by Target in the US.
• Analyze the turnaround strategies adopted by Cornell to revive Target’s operations in the US.
• Examine the challenges faced by Target in revamping its operations in Canada and attracting price conscious consumers to its stores.
• Explore strategies that Cornell could adopt in these difficult times.

Keywords

Target Corporation, Turn around, Fashion retailer, Tar-zhay strategy, International expansion, Supply chain, Merchandise selection, Brand recognition, Pricing, Inventory management, E-commerce, Store layout, Store expansion, Digital strategy, Point-of-sales, Customer traffic, Neiman Marcus group, Wal-Mart stores inc., Zellers, Gregg Steinhafel, Brian Cornell