Target may be on the verge of its own turnaround story if CEO Brian Cornell steps down in September and new leadership takes over.
Why Investors Are Watching
Investors want a fresh strategy that can reverse falling sales, win back customers, and help Target compete more effectively with Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN).
At the moment, Target is losing market share in core categories, struggling with e-commerce, and battling consumer perceptions that its prices are higher than its rivals. These challenges mirror the struggles Best Buy (NYSE:BBY) faced a decade ago, when many believed it was destined for “death by Amazon.”
Lessons From Best Buy’s Revival
Best Buy’s turnaround between 2012 and 2019 under CEO Hubert Joly offers an interesting comparison. The electronics retailer refreshed its stores, invested in employees, introduced price-matching, improved its website, reduced costs, and closed underperforming locations.
Most importantly, Joly created a clear vision for the company and recruited the right leaders to execute it.
What Could Work for Target
For Target, a new management team could adopt similar tactics. That may include:
- Expanding private-label goods to close the price gap with Walmart and Amazon.
- Cutting expenses to fund price reductions.
- Improving online shopping to reduce margin losses.
- Rethinking store locations and layouts.
- Focusing more on return on invested capital to guide strategy.
Bernstein analysts suggested that “a new management, especially one with an outside perspective, could be a positive catalyst.”
The E-Commerce Challenge
One big question remains: Should Target build a Walmart-style e-commerce supply chain? Such an investment would be costly and may not pay off without scale. Without a new approach, Target’s online sales could continue to drag on profitability.
Outlook for Target
Better economic conditions could give Target some relief. However, the company must first stop losing market share before any real turnaround takes hold. For now, the outcome remains uncertain.
