Most analysts are applauding Target’s decision to select an external candidate as its next CEO, but some question whether Brian Cornell has the right background to tackle some of the retail giant’s key challenges.
 
The Minneapolis-based retailer announced Thursday that Cornell, a senior executive at Pepsi, will take over as Target’s chairman and CEO on August 12. Cornell is replacing interim president and CEO John Mulligan, who took the temporary role after Gregg Steinhafel was fired in May.
 
The consensus among analysts seems to be that Cornell has some significant challenges ahead of him, including improving sales and traffic in the United States, fixing the disastrous expansion into Canada, and handling Target’s “omnichannel transformation.”
 
One of the predominant concerns from analysts about Cornell is his grocery-heavy background.
 
“While his food background might be helpful with Target’s challenges in executing at the shelf, he hasn’t shown anything in his past to indicate that he has any fashion experience,” Amy Koo, a senior analyst at Kantar Retail who closely follows Target, told Twin Cities Business. “He might be lacking on the image-conscious, marketing-focused side of things that would help with Target’s soft goods, apparel, and home goods sections.”
 
Cornell most recently served as CEO of PepsiCo Americas Foods, the company’s international food business—which is the largest of PepsiCo’s four divisions. Prior to joining PepsiCo in 2012, Cornell was president and CEO of Sam’s Club, CEO of Michaels Stores, Inc., and executive vice president and chief marketing officer for Safeway.                                                                   Brian Cornell                  

While Koo thinks Cornell might help improve Target’s food supply chain—which she said needs improving—she believes Target should also stay true to its “cheap chic” roots.         

“If you make Target into a supermarket, and de-prioritize the fashion and home sections, then it just becomes a regular grocery store,” she said.
 
According to the Wall Street Journal, current and former Target executives have said that Steinhafel eroded the company’s creative reputation by focusing more on selling basics like groceries and de-emphasizing its more “hip” offerings.
 
At least one analyst thinks Cornell is the right man for the job, however.
 
“We believe he’s a strong and decisive leader,” Simeon Gutman, a Morgan Stanley analyst, told the WSJ.  “His experience at large retail and CPG (consumer packaged goods) organizations should be instrumental in guiding Target.”

 
Gerald Storch, a retail consultant and former vice chairman at Target, told the Star Tribune that the board’s rapid decision to find a new CEO was “very smart” and “didn’t allow the period of limbo to extend too long.”
 
Storch added that the decision shows that Target was looking for someone with “charisma and a strong external persona.”
 
Faye Landes, an analyst at Cowen and Company, agreed that Cornell is a good presenter but questioned his experience in the areas that are causing Target problems, reported Barron’s.

“Cornell has no turnaround experience, that we know of, and has limited experience in the areas that Target explicitly stated, in its [first quarter] call, that the new CEO would focus on—Canadian retail and digital,” Landes said. “The company has only 2 percent to 3 percent of its sales from digital and has been talking a lot about the importance on omnichannel.”

Another challenge facing Cornell is Target’s cultural issues, which made headlines shortly after Steinhafel’s departure when a mid-level company employee in Minnesota posted a controversial email online, which was highly critical of the company’s corporate culture. 
 
“Target has always been very inwardly focused,” Koo said. “I think Target intends to address their culture issues by choosing an outside CEO, but Cornell was a very safe outside choice so we’ll see how much he really plans to rock the boat.”
 
Lastly, the question remains as to who will fill the role of president, which isn’t being assumed by Cornell. Koo (along with some other analysts) believes Target’s Chief Merchandising Officer Kathee Tesija may be in consideration for the spot as she had been viewed as a CEO candidate in the past.
 
Cornell will receive a base annual salary of $1.3 million as well as a payment of more than $19 million in stock to compensate for money he is forfeiting by leaving PepsiCo, according to regulatory filings.