Target Corp. has turned to an outsider as chief executive officer for the first time, betting that his background in leading consumer-related companies will be an asset. But the appointment of Brian Cornell has already raised questions about possible gaps in his experience in some key areas – including digital and apparel – at a critical time for the discount retailer.

Minneapolis-based Target, which is struggling with a money-losing Canadian launch and other setbacks, said on Thursday that Mr. Cornell, a former PepsiCo Inc. food executive, will become CEO on Aug. 12. He replaces Gregg Steinhafel, a veteran Target leader who left in May as the chain scrambled to recover from a damaging data security breach.

Mr. Cornell, 55, has a lot on his plate, including turning around the Canadian operations and improving the company’s lagging digital strategy while remaking Target into a cheap-chic destination for fashion and home goods in a fast-changing retail landscape.

“I have a deep appreciation and respect for the challenging retail environment,” he said in an interview posted on Target’s website. “ I have been close to the changes business and consumers have experienced over the last few years, and I have an acute understanding of how important it is to connect stores, online and mobile.”

After stumbling in Canada and on other fronts, Target is now counting on Mr. Cornell to build a new team and hit the ground running amid stiffer competition from rival Wal-Mart Stores Inc., which just got its own new leader, and digital powerhouses.

In Canada, where Target shelves often are empty and prices perceived as too high, some industry watchers have even suggested the retailer retreat or scale back to focus on revitalizing its core U.S. market. But Target spokeswoman Dustee Jenkins said the retailer is committed to fixing Canada.

“We know we have work to do in Canada,” she said. “We know we let the Canadian customer down.”

Michael Exstein, retail analyst at Credit Suisse in New York who has called on Target to consider leaving Canada, said Mr. Cornell has lots of experience but seems to lack “depth of experience.” His tenure was less than three years at each of PepsiCo., Michaels Stores Inc., Wal-Mart-owned Sam’s Club and Safeway Inc., Mr. Exstein noted.

“While this appointment serves to resolve one uncertainty for the company, a turnaround for [Target] requires a broad overhaul in terms of refocusing on merchandise, a decision on Canada and a shift away from focus on short-term financial metrics,” Mr. Exstein said.

Faye Landes, retail analyst at Cowen and Co. in New York, said the new CEO has no turnaround experience that she knows of and limited experience in the areas that Target has said it will focus on: Canada and digital.

“The question is whether Target can realistically close the gap versus online competitors like Amazon,” added Mark Miller, an analyst at William Blair in Chicago. “Relative to other CEO candidates, Mr. Cornell has a lighter resume in this area.”

Mr. Cornell countered in his Web interview that he has broad digital experience, having run as a joint venture with British-based and, at Sam’s Club, developed its “click and collect” e-commerce. More recently, at PepsiCo, he said he spent a lot of time dealing with virtually all retailers as they tackled their cyberchallenges.

Mr. Cornell said he’s not only worked with retailers around the world “but even more importantly, I understand the importance of building great teams.”

Mr. Miller said Target has suffered from a “lack of newness” in its merchandising. While Mr. Cornell oversaw new product introductions at PepsiCo and, before that, as an executive at grocer Safeway, his strength is food and not clothing or home decor, which are Target’s traditional strengths, Mr. Miller said.

He estimated that Target’s new product introductions, as a percentage of its total offerings among 20 general-merchandise categories, fell to 34 per cent in 2013 from 56 per cent in 2006.

Ms. Landes also referred to Mr. Cornell’s limited experience in the crucial areas of apparel and home goods, noting they make up just 8 per cent of Sam’s Club’s business.

Still, industry watchers also pointed to Mr. Cornell’s strengths. He did a solid job as CEO of Sam’s Club between 2009 and 2012, Ms. Landes said. Its sales at stores open a year or more – an important retail measure – rose 1.4 per cent, 1.7 per cent and 5.1 per cent in each of those years, she said.

Mr. Cornell is knowledgeable about both the retail and packaged-goods sectors, said Sandy Skrovan, U.S. research director at London-based consultancy Planet Retail. “Target needed to land a big fish to turn things around and set a future course.”

The Globe and Mail
Published Thursday, Jul. 31 2014, 5:57 AM EDT
Last updated Thursday, Jul. 31 2014, 7:13 PM EDT