Target executives say company will move faster, experiment more, empower its employees going forward; company needs to 'assume some of that risk-taking culture' it used to be known for, says retail analyst
ST. PAUL, Minnesota
May 27, 2014
(Saint Paul Pioneer Press)
– Is it a new day at Target Corp.?
Executives are stressing that The New Target will move faster, experiment more, take bigger risks and empower its employees.
"Our mission from the board is clear: provide focus, remove roadblocks, and unleash the team to move faster," interim CEO John Mulligan told analysts Wednesday as the company discussed quarterly earnings.
Left unsaid was the reputation of The Old Target: deliberative, top-down and altogether corporate. But the exit of CEO and president Gregg Steinhafel seems to be emboldening the discount giant to re-examine a lot more than its retail strategy.
Since Steinhafel was fired two weeks ago, executives at the Minneapolis-based discounter keep talking about changes to the corporate culture, even without a permanent chief executive in place.
And to some analysts, that sounds like a positive development.
"Retailing isn't for the risk averse," said Dick Seesel, a Wisconsin-based retail analyst. "When you're running a tens-of-billions of dollars, multi-faceted, coast-to-coast public company, it's easy to become risk adverse. But being risk averse isn't necessarily compatible with being a great retailer.
"So if they can assume some of that risk-taking culture that they used to be known for, it's probably a healthy thing," Seesel added.
Interim CEO Mulligan said on the earnings call that Target will become more experimental, both in its stores and online.
Not every idea has to be perfect, he suggested. He said he wants to push "more activities out into the business that we're testing, we're modifying, adjust and improving on. And if it doesn't work, pull it back and retreat from that and learn from the testing."
Added Kathee Tesija, Target's merchandising vice president, "Historically we've intended to work on our newness until we felt we got it to an almost complete level ... Now we want to get it in front of our guest very quickly, get their reaction to it, so that we're fine-tuning it much more quickly."
Stan Pohmer, a former Target official-turned-retail consultant, heard the echoes of Target's past.
"This is a very similar philosophy to what had been imbued with the company under (former CEO) Bob Ulrich, when Target was doing extremely well, when they were first to market with a lot of stuff, when they were trend and fashion forward -- call it the heyday, if you will."
Pohmer remembered Ulrich's two oft-repeated phrases: First, "Speed is life." And second, "Ready, fire, aim."
Said Pohmer, "What he was trying to say is: If you wait to introduce something until it's 100 percent, you're going to miss the window of opportunity. So get it out there, you can always learn and fine-tune it.
"And (on Wednesday), for the first time in a long time since Ulrich left, I heard the same philosophy again," Pohmer said.
Today's retailing world is different than the 1990s, and so is the public perception of the Target brand, noted Chuck Grom, an analyst with Sterne Agee.
"I think their brand equity has eroded significantly over the last decade," Grom said on CNBC. "In the late '90s, this was a company that had a lot of mindshare with consumers, and I think they've lost that. And that's evident in their traffic."
Last week, the issue of Target's corporate culture arose in a different forum, when its marketing chief publicly conceded that some harsh criticisms of the controlling culture at its Minneapolis headquarters rang true.
Ultimately, Seesel noted, Target's corporate tone will be shaped by its new CEO, not the interim leaders. And he cautioned that retailers need to be smart, not just quick. Look at what happened at J.C. Penney.
"That's the flip side of moving with such speed that you don't do your due diligence and you don't do your homework," Seesel said. "It's gotta be well-thought-out speed."
Tom Webb can be reached at 651-228-5428. Follow him at twitter.com/TomWebbMN.