Sure, Target (TGT) was hard-hit by a data breach that impacted as many as 110 million customers. But truth be told, the retailer had lost some fans long before that, with some viewing the once chic "Tarjay" as having lost its way.
New Target chief executive Brian Cornell tells The Wall Street Journal that the company will focus on a group of "signature categories," seeking to make "bold changes" that will draw consumers back. For fans of the good old days at Target, when it sold Michael Graves' whimsical teapots and cheap but chic clothes, the new focus is clearly designed to hook them back in.
Both Target and rival Walmart (WMT) are facing serious competitive challenges, analysts at Goldman Sachs wrote in a July report. Dollar stores and smaller competitors are luring customers away from the massive big-box stores, while online competitors such as Amazon.com are taking a bite out of bricks-and-mortar stores, thanks to low prices, quick shipping and easy online search tools.
To stand out from the crowd, Target is planning on investing in a few key categories, including baby products and "design and style," which means the type of fashionable products that caused some Americans to give the store its faux-French pronunciation. It also plans to focus on children's products and wellness products.
"We've got to major in these signature categories and make some bold changes to re-energize those businesses," Cornell told the Journal. "All categories can't be prioritized the same."
Target spokeswoman Molly Snyder wrote in an email to CBS MoneyWatch that the areas the company will focus on are "the areas guests most commonly associate with the Target experience." The company won't back away from other categories, but is "simply prioritizing our focus areas," she added.
Cornell, who was hired from PepsiCo, is expected to talk about the changes to the company's staff at its annual employee meeting today.
What's less clear is what Cornell's plans are for Target's ailing Canadian division. The company's efforts to expand north of the border have been costly, with Goldman Sachs estimating that the company has invested more than $4 billion in its Canadian plan. Sales in the Canadian stores have fallen short of projections, and Target may continue to lose money on the unit through 2017, Goldman said in its report.