Among the questions most frequently asked in the retailing community these days is this one: What’s wrong with Target? The corollary question that supplements this first query is this one: Is there any stopping to Walmart’s unprecedented surge to the very pinnacle of the mass retailing community?
These questions are not difficult to answer. They’re nearly impossible to answer.
Let’s look first at Walmart’s recent accomplishments. The retailer’s sales for the most recent fiscal year totaled $680 billion, making it the largest company in the world. Similarly, its workforce of 2.1 million associates puts it first globally in the category. In the United States, it commands one-tenth of all retail spending, excluding automobiles, while accounting for one of every four dollars spent on groceries.
During the current fiscal year, Walmart’s sales are projected to grow by a comfortable 3% to 4%, while its operating profit is expected to increase by an even faster rate. Speaking of e-commerce, an area where Walmart likely got a late start, the company’s e-commerce unit recorded over $100 billion (yes, that’s billion) in sales last year. More impressive, its online volume is growing at an estimated 20% annually, twice the pace, on average, of its rivals. In terms of U.S. online grocery sales, it leads all competitors.
This review of Walmart’s accomplishments could continue indefinitely. But we’ll end on two more positive notes: The retailer’s online membership program, Walmart+, generated $3.8 billion in revenue last fiscal year, twice the figure of five years earlier. And the retailer’s relatively new advertising unit recorded $4.4 billion in revenue last year, an increase of almost 30% on the previous year.
As for Target, until recently a worthy competitor to Walmart, there are not many positive points to make. Most recently, the retailer announced disappointing Christmas season sales, predicted a difficult time in its current fiscal year, saw its stock price plummet into an apparently bottomless well, and apologized for the look and feel of its brick-and-mortar locations, which seem, to many observers, to lack a serious program for attracting new customers while retaining those shoppers who in the past were unconditionally devoted to the Minneapolis-based discounter.
At bottom, the retail community is witnessing ever-louder pleas for new and more innovative management at the most senior corporate levels, with particular attention focused on the company’s chief executive.
Even Target’s strongest supporters admit that Brian Cornell, the CEO in question, has made some errors, many of which have stunned the retailer’s champions. Many of these errors, which have recently been recounted in the both the business and general press, border on unexplainable. There have been ill-considered acquisitions, hasty and ill-omened decisions about the debate between working at home or in the office, merchandising choices that have combined to give this formerly brilliant merchandiser a black eye, and the increasing unavailability of the man at whose desk the buck inevitably stops.
What makes this current Target situation even more inexplicable is that Cornell, throughout a sometimes brilliant retailing career, has repeatedly distinguished himself. In short, he is not an ordinary retailing executive. Far from it.
At any rate, this debate or comparison or discussion could continue indefinitely. But that won’t solve anything. In the end, there’s only one question to be answered: Can Target dig itself out from its current trials? Moreover, there’s only one person who can answer it: Brian Cornell.
