Archive for August, 2014

Target finds its new CEO

Target announced this week its first-ever outside hire as CEO. Brian Cornell brings a mix of CPG and retail background to Target, including stints at Pepsico, Sam’s and Michaels. My comment at RetailWire reflects some caution about whether he can fix what really needs fixing at Target. If he can empower his merchants and other members of his team, the appointment should be a win:

Some of the initial reaction I’ve read pushes back on Mr. Cornell’s Pepsi background, ignoring the time he has spent at retailers like Sam’s and Michaels. The real question is whether he can shift the spotlight back onto apparel and home decor — always Target’s “calling card” for brand differentiation — and away from food and consumables. His background raises a caution flag, but with luck the Target board identified somebody with the leadership and strategic skills that the company needs right now.

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Consolidation hits the dollar store industry

I posted the following comment on RetailWire after Dollar Tree announced its acquisition of Family Dollar. While I don’t consider myself an expert in this segment, I think it’s worth noting that a high-flying sector is now maturing and heading into the “consolidation” phase that many other retail segments have undergone. Here’s my point of view:

This acquisition follows the typical pattern of consolidation after a period of growth. This has happened over the years in segment after segment of the retail industry (and other industries), from department stores to discounters. The combined company now becomes roughly equal in size to its biggest competitor, Dollar General, but will have some growing pains to contend with because of some location overlap along with different approaches to the “dollar” business.

If the outcome is successful, there are two strong competitors in this category. They both have the potential to become more robust factors as big box stores like Walmart and Target rush into the small-format battle. Meanwhile, look for other industry segments (e.g. off-prices) to hit a period of maturity followed by consolidation, too.

Target Express enters the small-format fray

There was plenty of interest in Target’s recent opening of a small-format store (Target Express) in the Dinkytown neighborhood of Minneapolis. The proximity to the University of Minnesota shaped a lot of the content in the store, according to local press coverage. I commented recently at RetailWire about Target Express, and I have mixed feelings given the other challenges on Target’s front burner right now:

With Walmart’s strengths in food and commodities, its move into small format stores (Express, Neighborhood Market and so forth) makes a lot of sense. It’s a growth opportunity, especially as a way to find real estate in urban areas and other spaces that can’t handle a supercenter. On paper, it’s not surprising to see other retailers pursuing the same game plan.

Target, on the other hand, has spent so much time and effort over the last few years trying to build a grocery and “consumables” business that it lost sight of what made the company great in the first place. The new CEO (hired since this original posting) needs to focus on fixing apparel and home decor, continuing to roll out CityTarget, and getting Canada squared away — before pursuing a “me-too” real estate strategy that doesn’t play into the company’s core brand positioning.


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