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Target's CEO on navigating crisis in 2020

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Few companies could have predicted the global pandemic. Likewise, there wasn’t a corporate guide to the national outcry to the killing of George Floyd and the other forms of racial injustice our society is belatedly confronting.

Some companies react to crises quickly but haphazardly. They aren’t prepared for an emergency or don’t have clear values to guide them. And, if companies haven’t invested in their people, in their infrastructure, in their capabilities, in experimentation, then they’ll likely struggle to handle anything unexpected.

On the other hand, Target didn’t have advance warning of either crisis, and yet it’s managed to respond proactively and positively in both situations. Why? As Chairman and CEO Brian Cornell explained during a NRF Retail Leadership Series event last week, the company has invested in its business for years and practiced its values of helping “all families,” including employees and the communities they serve.`

Floyd was killed in Minneapolis, where Target is headquartered and where some stores were later damaged. Cornell’s initial reactions to Floyd’s death and resulting unrest included ensuring store and employee safety while also seeking to hear directly from Target’s African American employees. The latter was achieved first through a small group call and later through a Zoom call with more than 7,000 participants.

Target knows that the system is unfair to Black Americans, Cornell said. Target associates are pulled over constantly because they’re Black, he said, while relocating Target leaders will be looking for a home and be pulled over. Employees will go running, come home, and police will show up a few hours later. “Why? Because they’re Black,” Cornell said.

Internally, Cornell has said any damaged stores would be rebuilt and restored, with his June 5 statement noting that affected employees would receive “full pay and benefits,” along with other resources. Target has also created an internal task force focused on racial equality.

Externally, Target’s initial response included $10 million in donations to existing partners, as well as free small-business advice “for Black- and people-of-color-owned small businesses in the Twin Cities, helping with rebuilding efforts.” The company is also reassessing its “partnerships with law enforcement.”

Target isn’t the only retailer addressing racial inequity, nor does it have to be. Cornell and National Retail Federation President and CEO Matthew Shay also discussed how all of retail can become involved in change efforts, with Shay citing the “unique and a special role that we can play there.”

Investing in stores and people paid off during the pandemic

Of course, Target has also been dealing with the coronavirus pandemic for months, and while that was also another event without a “playbook,” as Cornell put it, the priority has again been on serving employees and customers while keeping them safe.

Safety, of course, was a priority. “Additional pay and benefits” also had to be part of a response, he said, including extra paid leave for at-risk populations (including older or pregnant workers) and extended backup care for parents and guardians.

Target has also accelerated its existing commitment to a $15-per-hour minimum wage, which will now take effect July 5. “We wanted to make sure we continued to support them with the right benefit and pay program,” Cornell said, and he won’t apologize for investing in people.

From a strategic standpoint, Target has come to expect week-to-week changes in the marketplace and in consumer behavior. For instance, February was mostly normal, Cornell said.

By March 3, enough had changed that Target made its investor conference a remote event, but analysts asked few questions about coronavirus. The questions they did ask were technical in nature -- related to supply chains and fulfillment.

But in the coming days and weeks, Target was rushed by shoppers seeking household essentials as the pandemic emerged in the US and sheltering in place took hold. Consumer behavior has continued to evolve since then. Household essentials continue to be in demand, Cornell said, but shopping habits expanded to office supplies, electronics, kitchen equipment and other products, which suggested an adaptation to increased time spent at home. The coronavirus stimulus law further affected shopping behavior, with apparel sales starting to re-emerge.

“Every week has been different during the pandemic,” Cornell said, and there is much more to come with regards to the virus’ progress, changing economic conditions and a potential second wave.

Stores have still been important even as digital business has boomed. Target has been able to respond to safety conditions and consumer demand by adding or expanding in-store pickup, drive-through lanes, Shipt shoppers and sdt elivery. Stores have been essential to that effort, Cornell said, because using them for fulfillment instead of distribution centers can yield tremendous cost savings, particularly in the last mile.

Ultimately, Target’s ability to respond quickly to the pandemic, to keep stores safe while expanding the ways customers could receive goods, stems from the investment Target has put into its stores and technology since Cornell took over in 2014.

Target’s rethink of its store model has been “a testing-and-learning mode for years, and that continues,” he said.

This testing has included store remodels, opening smaller stores and creating a consistent, guest-friendly experience in a myriad of locations across the country. The experimentation is ongoing, he said, as the first small-format stores and remodels don’t look the same as later versions. Target is trying new things, listening to feedback and adjusting as necessary.

“We can’t be striving for perfection,” Cornell said. “We’ve just got to adjust and iterate along the way.”

After the pandemic, Cornell said, the consumer experience will become a mix of services, where people still go to stores but also like the options of online shopping, pickup flexibility and rapid delivery.

Safety and trust will be key values going forward. “How do we become the safest place to shop?” he said. “How do we make sure that through the entire shopping experience, we’re thinking about safety?”

 

James daSilva is the longtime editor of SmartBrief's leadership newsletter and blog content. Contact him at @James_daSilva or by email.

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