On Wednesday, Target indicated that its current CEO, Brian Cornell, is resigning from his post after 11 years. In his place, they would replace his post with a new CEO from within their organization, according to the sources. In recent years, the reputation of Target has fallen several folds, which had to be restored by the CEO’s planning. Moreover, he is on a notice period till Feb 1, after which another young talent will take over his responsibilities. The new Chief Executive Officer, Michael Fiddelke, is a 20-year-old whose skills impressed the organization.
Challenges faced by Target in recent years
The owner of 1,980 stores in the US has faced issues in making a comeback after the pandemic destroyed its cost operations. Moreover, the economy was making no progress even after multiple efforts by the Government across the world. Thus, when the economists finally succeeded in lifting it, there was a high level of inflation in the economy. This change not only affected its financial model but also its net sales, which were much higher before 2020.
Therefore, it was expected that its stores might not meet the expectations of people like before. Complaints about the mess in the expensive-looking stores started coming, as people remembered it by ‘Tarzhay’. The stores were no longer those aesthetic, budget-friendly ones that attracted customers for their purchases. Additionally, it had deals earlier this year, which provoked consumers into a boycott movement against it. It decided to pair with several leading retailing stores, such as Walmart, to deal with the challenges. It could have up-scaled its field in corporate diversity, equity, and inclusion initiatives, but got backfired on it.
Even after all this mess, no outsider was recruited to clean up the scatters of its reputation from the streets. It was a surprise for the analysts, as the retailing enterprise went down by 8% in the stock market due to its poor condition. Moreover, the main reason for the fall was their appointment with Fiddleke and the degrading scales again.
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How is Michael Fiddelke’s appointment necessary for the enterprises?
Consumers have lost interest in the old tactics of the businesses, and now demand a new attraction to the stores. However, to do that, a company must adapt to the evolving environment, which is observed more by a young mind. Even though investors backed their investment after the announcement, some believe that he deserves a chance. No company would like to risk its reputation with a 20-year-old until he has acquired some real skills. Therefore, he has one responsibility, which is to uplift the bent shoulder of the retail firm.
In an interview, Fiddelke confirmed that his knowledge about the company was never confined to a desktop. He pointed out one of the mistakes made by the company in the pandemic, which ultimately contributed to its doom. According to him, during the pandemic, a demand for cozy furniture rose rapidly, which was met by the outdated furniture. He also emphasized that he has been appointed as Target’s CEO for three crucial reasons. The first reason is that he has to restore the original fame of the retail giant, just like before. The second reason is to improve its customer relations with those who lost faith in the company. At last, the third is the technical investment for improving their feedback.
Decline in the profitability of Target over the years
From the nine quarters’ data, the company showed a declining rate of sales, which was concerning. Along with the announcement of the new CEO, the sales figures were also revealed by the retailer. According to the interview, an approximate fall of 1.9% was observed in the sales record of the previous quarter. Additionally, the net income of the company decreased by 21% during this time, needing a new push for growth.
During Cornell’s supervision, he tried to revolutionize the stores according to their location, which worked to an extent. He also introduced an online platform for orders, which reduced the operational cost. However, the staff wasn’t able to keep up their pace with packaging online deliveries and handling the store crowd. This resulted in a negative comment base for their stores due to improper management and staffing issues. Moreover, in the first quarter of 2022, a 52% drop in the company’s profitability was observed, as consumer preferences changed.
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Conclusion
Before 2022, the company faced a downfall in the year of 2014, when it underwent data breaches. The company’s reputation was shredded into paper pieces, and its profits declined at an increasing rate. However, by the time it built trust again with the users, the pandemic shut down the stores again. This time, the impact was long-lasting, as it was accompanied by high inflation rates.
