Veteran CEOs Talk About How They Would Fix Troubled Companies


Target in the Bull’s Eye

The Situation: Few companies have been whacked lately like Target, the $73-billion Minneapolis-based retailer that used to epitomize strategic savvy. History’s biggest hacking fiasco afflicted the brand last Christmas, and its invasion of the Canadian market has fallen flat. Those mistakes brought down Gregg Steinhafel as CEO in the spring. But as Target searched for his successor this summer, it also became apparent that its appeal to U.S. consumers as the hip discount store already had been fading for a few years.

The Solutions
Cohen: They have to be bold again—get fashion-forward designs at cheap prices to get customers back in. The headwind they have is that the value-conscious customer doesn’t have as much spending power in this economy as that customer did in Target’s heyday. And they should make the difficult decision and get out of Canada.

Durrani: Their problems started before the data breach; their store traffic dropped to 32 percent of all U.S. shoppers from 38 percent about two years ago. Their online launch was very slow and they dropped prices dramatically to compete with Amazon and it didn’t work. Target needs to get back to the formula that worked five and 10 years ago among younger, and even older, educated shoppers.

Kurt Jetta: They’re at a severe disadvantage in Canada because it’s extremely price-sensitive, and Target has gotten away from compelling price promotions. Plus their big emphasis on fresh groceries in the U.S. isn’t sustainable because Target doesn’t have enough store traffic to make that business really vibrant.


Walmart’s Wind Down

The Situation: The company strode as a Gulliver amid legions of Lilliputian critics because as long as its core customer base remained loyal to Walmart’s unbeatable low prices and selection, any CEO could withstand rhetorical attacks on the company’s business model. Major expansion in groceries fueled even more sales and foot traffic. But Walmart has reported six consecutive quarters of declining same-store sales in the U.S., even as its efforts abroad—including a bribery scandal in Mexico—continue to flounder. CEO Mike Duke is pushing smaller stores as a major solution.

The Solutions
Gould: Restoring the company requires a healthy core business. You can wonder if they have enough global growth; but even more, they have to fix the U.S. same-store sales phenomenon. And have they sufficiently mastered the omni-channel approach to retailing? I don’t think the web-site-to-store pickup gambit is really the way people want to shop these days.

Silverstein: As a giant, Walmart should be running 100 different market experiments. They have to be in the business of creating new things and assuming that, like any startups, 90 percent of them are going to fail. They need to be creating the equivalent of a new Fortune 500 company each year. Meanwhile, the company has got to sell everything online like Amazon does, not just focus on the products they sell in Walmart stores.


Whole Foods Markets: Losing its Niche?

The Situation
The retailer that essentially created the U.S. better-for-you food category relied for its first two decades on a near monopoly selling organic and natural fare, a hold that was supported by a knowledgeable and helpful staff of crunchies and was reinforced by Whole Foods’ vast control over shelf space for hundreds of startups that coveted its upscale and health-conscious clientele. However, the $12.9-billion, Austin-based company has struggled lately as competitors rushed to offer much the same fare at lower prices. Whole Foods is responding with its first-ever national ad campaign, more experimentation with home delivery and bigger selection of its own lower-priced goods.

The Solutions
Durrani: Their foray into private label in a heavy way, through the “365” store brand and others, adds to cash flow and allows them to compete against Trader Joe’s and Costco. But it’s a flawed strategy and it isn’t working because people go to Whole Foods for branded, premium products—not private label. They need to go back to their roots and innovate. And they need to stop worrying about lower-priced competition because people who go to Whole Foods aren’t going to Walmart.

Ayall Schanzer: The only way to fend off competition is to broaden its base of clients beyond the affluent. How can their proposition cascade down to more middle-income individuals and capture more households? However, Whole Foods still has to offer an experience that is differentiated enough to get people to come to its stores.

Silverstein: Whole Foods needs to preserve and—in fact—build up the unique culture that it has that other stores don’t, inside its stores and for its employees, like Starbucks has. It needs to be recruiting in high schools to become the place that every kid wants to work when they’re in high school.

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