Target has been dealing with competition from Amazon and Walmart while also trying to cater to fickle consumers who have swapped out traditional retail for shopping on their phones.
But Target has found the right balance between physical stores and digital commerce. That’s why Target’s Brian Cornell is the CNN Business CEO of The Year.
Cornell beat out AMD’s Lisa Su and Chipotle’s Brian Niccol (who was our pick as top CEO in 2018) for the honor.
Target’s sales and profits consistently topped Wall Street’s forecasts this year. Analysts are predicting healthy results for the holidays as well, with fourth quarter earnings per share expected to rise 11%.
Investors have rewarded the company too.
The stock has nearly doubled this year, making Target one of the top performers in the S&P 500. Shares have easily outperformed Amazon and Walmart. Meanwhile, department store rivals Macy’s, Kohl’s and Nordstrom are among the market’s worst stocks in 2019.
CNN Business asked Cornell how Target has been able to stay ahead of the pack in a rapidly changing retail landscape. Here’s what he had to say about Target’s stellar 2019 in an email exchange.
Target has been able to thrive at a time when so many brick-and-mortar department stores are struggling. What do you think Target has done right to get consumers to keep coming to the stores?
“Target has earned a place in the retail winners’ circle by investing in our business and staying true to our guests and our purpose. To understand how we got here, you need to start back in February 2017 at Target’s Financial Community Meeting.
We laid out a strategy and significant investment that put stores at the center of everything we do for our guests — remodeling and opening stores to create a convenient, inspiring in-store experience while also making our stores fulfillment hubs for e-commerce.
The decision was not well-received at the time. The ‘retail-is-dead’ narrative was in full effect, and we were making one of the largest investments in our history. But we knew that, over time, we would demonstrate we were doing the right thing for our guests, our business and our team.
Fast-forward to 2018, when we reported our best results in a decade. The momentum has continued this year as we’ve grown quarter after quarter on both the top and bottom line and continue to see our traffic on the rise. I’m incredibly proud of the work the team has done to build the capabilities that underpin our strategy and their excellent execution against our plans.”
Target’s digital and mobile commerce efforts are paying off. Explain how you see e-commerce trends changing in the next few years and what that will mean for Target?
“We’ve invested heavily in building a digital shopping experience that complements our in-store experience. Today the curated assortment, digital tools and site design make it really easy to shop online. On top of that, delivery convenience and speed are — and will continue to be — incredibly important to guests who shop our digital channels.
By making stores the center of our digital business, we’re offering them both. We’re using our nearly 1900 stores across the country as mini-warehouses to fill digital orders. In fact, about 80 percent of our digital orders are fulfilled by a store.
Our stores are within 10 miles of three-quarters of the US population, which adds speed, improves capacity and lowers costs. And, when speed matters most, our guests have made it clear they want same-day service. It’s why we’ve scaled same-day offerings like delivery from Shipt, Order Pickup and Drive Up across the country and continue to expand.”
Amazon and Walmart are formidable rivals. Walmart has also invested a lot in digital while Amazon has boosted its physical footprint. How do you stay competitive with these larger retailers?
“We know our guests have many choices for where to shop. We also know some of the things guests love most about Target are the same things that differentiate us in a crowded and dynamic retail environment. We often talk about it as the power of ‘and.’ We offer unique owned brands alongside a curated selected of national brands.
You can shop Target for both style and essentials, for needs and wants. We offer nearly 1900 easy and inspiring stores and a variety of digital fulfillment options. Our traffic has grown consistently quarter after quarter and we continue to increase market share across the core categories we sell — that tells us our efforts are resonating with our guests.”
Name one or two things you think Target really got right this year that helps explain the company’s success.
“There’s not one aspect of our strategy that’s driving our success, it’s all of them working in concert to create a great guest experience. We’ve invested in remodeling stores to offer guests inspiration and ease on every visit.
We’re opening new stores in the heart of major cities and on college campuses, bringing the Target Run closer to guests who previously had to travel away from home to shop one of our stores. We’ve reinvented our owned brand portfolio and partnered with great brands like Levi’s and Disney to bring our guests new and exciting merchandise.
We’ve grown our same-day services so guests can shop from their desks at lunch and have their order delivered that evening or pick it up on the way home — we’ll even put your items right into the trunk with Drive-Up. And we’ve invested in the team that makes it all happen, increasing wages and offering expanded benefits and training.
The work to bring all these initiatives to life has been underway since well before 2019. Our teams’ dedication to our brand and our guests over the past several years — even when there were doubters who didn’t believe in our strategy — have brought Target to where we are today.”
Target has come a long way from the data breach problems of five years ago. Since you joined the company, what have you done to invest in cybersecurity in order to make sure that sensitive customer data is never exposed/compromised again?
“We know our guests put their trust in us so we work tirelessly to protect them. We’ve doubled our information security team since the data breach and I’m really proud of their skills and expertise.
In addition, we’ve made significant investments in tools and systems, training and partnerships to stay ahead in this space.”