retail news in context, analysis with attitude

by Kevin Coupe

There was a lot of analysis taking place yesterday after Target CEO Brian Cornell announced that the retailer plans to close all of its 133 stores in Canada, laying off more than 17,000 employees, ending a venture that launched less than two years ago. The move, while not wholly unexpected, struck me as both a decisive repudiation of previous management's strategy and tactics, as well as a concession that Target's global ambitions have come to an end, at least for the foreseeable future.

Since it had been reported earlier in the week that Cornell was preparing to make a decision about Target's Canadian prospects - and he concluded that Target could not be profitable there until at least 2021 - I was convinced that whatever decision he made had to be both quick and final. There was no room for dithering.

In looking at a lot of the coverage of Target's decision and reflecting on what I've been told by people in the know, it doesn't seem particularly hard to pinpoint the retailer's problems north of the border. It didn't have the right products and often was out of stock, it didn't have the right prices, it didn't deliver on a value promise consistent with its US image, and it often didn't even have the right locations. If all those things are true, then it isn't hard to understand why Cornell felt that it was time to rip off the band-aid and move on. (Several stories suggested that what Cornell is going to focus on are small stores and the City Target concept, which he thinks have the best chance of driving growth.)

Colin Powell once said, "Bad news isn't wine. It doesn't improve with age." And it strikes me that Cornell demonstrated an understand of this precept and real leadership in making such a big decision.

If Cornell had been less decisive and allowed the Canadian disaster to fester, it would have become increasingly distracting - both culturally and economically - as well as becoming his problem. To this point, it was still a problem of his predecessors' making ... and it was best disposed of quickly.

In reading all the stories about Target's Canadian misadventures, I found myself thinking about Tesco's misadventures in the western US. It isn't apples-to-apples, but I do think that to a great extent, its Fresh & Easy Neighborhood Markets suffered because they didn't have the right products, didn't communicate the essential value proposition, and in some cases didn't have the right locations. (All problems, by the way, that new management brought on by Yucaipa Cos. seems to be addressing.)

I wonder how different Tesco's current situation might be if CEO Philip Clarke, immediately after succeeding Sir Terry Leahy in the big chair, had decided to shutter or sell the Fresh & Easy stores. He seemed to be evaluating them from day one of his tenure, and the indecision seemed palpable. Had he moved more decisively to cut off a limb that seemed to only cost money and distract the company's management from serious issues in its home UK market, Clarke might have saved Tesco from at least some of its recent heartache, not to mention saved his own job.

Not many executives will necessarily find themselves in the position of having to make a decision about a foundering global expansion plan engineered by their predecessors. But it seems to me that the broader Eye-Opening lesson - that bad news almost never gets better with age - is a good one for every leader to keep in mind.

BTW ... on the morning of Tuesday, January 27, I'll be moderating a panel of industry experts at the Food Marketing Institute (FMI) Midwinter Executive Conference ... the panelists will be Burt Flickinger, Managing Director of the Strategic Resource Group; Scott Moses, Managing Director at Sagent Advisors; and Andrew P. Wolf, Managing Director at BB&T Capital Markets. We'll be talking about a lot of stuff, and I'm pretty sure that one of the things I'm going to ask them is about lessons learned from Target and Tesco.

It should be fun. If you're attending FMI Midwinter, I hope you'll stop by and say hello.
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