Target Corp. President and CEO Brian Cornell feels more upbeat about business now than six months ago and has clear ideas about what it will take for retailers to ride out the headwinds of 2022.
For Cornell, it’s about being nimble, staying close to consumers, not forgetting lessons learned during the pandemic, and sticking to COVID-19-inspired tactics that make shopping easier, more convenient, and more safe from health risks, such as contactless and fast drive-thru pickups and same-day delivery.
“As I think about 2022, which is all about agility, adaptability and flexibility, this is going to be more important than ever,” Cornell said Sunday morning at the National’s ‘Big Show’ convention. Retail Federation during an in-person fireside chat with NRF President and CEO Matt Shay.
Cornell also said it has spent billions to modernize Target’s 1,900-unit chain of stores – putting stores at the center of Target’s omnichannel platform at a time when many were still predicting the death of brick and mortar – as well as to invest in digital, supply chain and increasing wages and training, which began about five years ago, and the company’s format as a multi-category destination incorporating multiple third-party partnerships top-tier brands like Ulta and Disney have paid off during the pandemic.
“I would like to have a crystal ball and tell you what the first half of the year and the second half will look like, and when the variation will start to subside. But we are going to have to recognize that every day we have to listen to the consumers and we make sure to adapt and adjust as needed,” Cornell said.
“The principles that we have all learned during the pandemic are going to be as important in year three as they were in years one and two…There will be an ongoing emphasis on ease and reliability and the importance of safety, whether it’s putting up the plexiglass at the point of sale, putting up social distancing signs or providing masks and other safety devices, and giving the option, if you’re not not comfortable in the store, using same day (delivery) services These elements will remain important.
“We also know that consumers like inspiration, they like novelty. For us, brand partnerships are so important – to be able to come to Target to get the things you want and need, and experience Ulta beauty shops in our stores, or an Apple store, or Disney items. These partnerships provide that level of inspiration, but also ease and convenience because you can shop in one place. Our multi-category model has certainly been beneficial during the pandemic, the fact that you can shop for beauty products and household essentials, and pick up clothes and items for your home, get those electronics so important for working from home, the all in one place, the ability to find one place where you can combine all of your purchases will be an important feature for many of us in the future.
Cornell, who has headed Target since 2014, addressed two of the industry’s biggest concerns: how consumers will react to the country’s record inflation and the supply chain.
When gasoline prices rise, consumers generally drive less, Cornell said. “They’re consolidating the number of places they shop,” he added. “We know that when restaurant prices and menu prices increase, more consumers will eat at home. When looking at price increases for their favorite national brands, they may consider a store-owned or private brand as an alternative. Some of the historic consumer reactions to inflation will recur in 2022.
“I know our brand partners will say, ‘What do we need to do differently to rekindle demand?’ So we’re going to learn how the consumer is reacting over the next 60, 90, 120 days to rising prices and some of the challenges they’re going to face, and we all need to make sure we understand how to continue to meet the needs of the consumer. , deliver the right level of value starting with availability and the right level of service and continue to weather the headwinds that come our way.
Speaking at length on the supply chain, Cornell said: “Part of the challenge we face is the unprecedented demand we have seen in our system. This demand will change over time, but I think there will still be very strong demand over the coming year.
Among his recommendations for correcting supply chain issues, “there needs to be greater transparency of data, sharing of information… In the longer term, the [Biden administration’s] infrastructure bill over time will allow us to modernize our ports and improve transportation, roads and bridges. It won’t happen overnight. This is a multi-year investment that will allow us to have a state-of-the-art supply chain in the United States compared to a chain that has fallen behind. So in the short term, the best thing we can do is share data, provide more transparency, make sure there’s more visibility upstream, so that we work as a nation and as an industry to continue to use data and analytics to address some of the near term issues.
Being flexible and adaptable applies to dealing with supply chain issues, as Cornell has suggested. “One thing we did, even before the pandemic, is use different ports in the United States. All the headlines talk about is Los Angeles, Long Beach. The ships are there and, by the way, they have been out for years. You could have taken these photos five or ten years ago. Can we move more containers to the Pacific Northwest or move them to Savannah or Virginia to ease some of the pressure? »
Off-peak container unloading “is critically important, and we’ve been doing that for some time,” Cornell said. “Now many others recognize that you have to work on a 24-hour cycle.”
Cornell also urged incentivizing Americans who decide to work in the supply chain, whether that’s a distribution center, manufacturing plant or truck driver. “We need more drivers on the road to move all of this inventory to its endpoint and key destinations,” Cornell said.
Summing up the 2021 holiday season, Cornell said: “The reported numbers are really encouraging. Consumers went out and bought all categories. They shopped early. They shopped late. They shopped throughout the season. They used both physical and digital channels. More importantly, consumers said retail is still critically important to them and that bodes well for the future of the industry.
“Over the past 22 months, we have all faced unique headwinds – a playbook none of us had before us. It seems everywhere you go today, America is talking about the supply chain challenges, inflationary pressure, labor shortages, but what’s so satisfying to me is seeing how the consumer reacted during the holiday season. to shop. It just gives me incredible optimism for the future. America wanted to get back to a bit of normalcy and go out with friends and family and shop in our stores.
On April 13, at the NRF’s “Honors” dinner in New York to raise scholarships, Cornell will receive the NRF’s “Visionary 2022” award, for successfully piloting Target through the pandemic and leading investments in the undertaking made years ago and which are now bearing fruit. Target’s 2020 revenue increased 19.8% to $92.4 billion. Target’s third-quarter 2021 revenue rose 13.3% to $25.7 billion as comparable store sales increased 9.7%.
“At the start of 2017, we were talking about a very different approach. It wasn’t very well received,” Cornell said. “Despite some media reports and some analysts saying brick-and-mortar retail was going to die out, we said, ‘We’ve tested and learned and we’re going to invest billions in store renovations’ when people weren’t talking no renovations. We said we were going to build new stores in urban centers like New York, on college campuses, in new cities where Target had never been before. We’re going to invest in our brands, activate our 1 900 stores as fulfillment centers across the country and we will be making a big investment in our team, increasing our minimum starting wage and continuing to invest in talent development.
“There was a pretty cold reaction. But those investments we’ve made have certainly helped us accelerate through the pandemic. I had no idea that we would meet the challenges we have faced over the past two years. I actually had no idea what sheltering in place meant in March 2020. We all learned together.
Cornell concluded his conversation with Shay with a few words about corporate culture. “I have recognized over the past two years, perhaps more than ever before in my career, the importance of culture. We’ve always had a unique culture at Target. We’ve actually spent time in the middle of the pandemic saying we better make sure we talk about it consistently. »
He defined Target’s culture as “all about caring, growing and winning together.” I have found that during the pandemic, this commitment to culture has been more important and a bigger part of our success than ever before… Empathy has been more important than ever – caring for the team and our guests , investing in personal growth and development. The work environment isn’t getting any easier, so how do we use a culture defined by caring, growing and winning together, to attract and retain great talent, ensuring it’s part of our approach to hiring and staffing, I think that’s going to be a point of differentiation”.