When Amazon announced that it was buying Whole Foods for $14 billion, retailers everywhere were stunned and wondered how they could possibly compete against an even more powerful online giant. Everyone, that is, except Brian Cornell, the CEO of Target.
Speaking with Susie Gharib at Fortune’s Brainstorm Tech conference, Cornell says he’s sticking with the plan he designed in February to revitalize the company: a three-year $7 billion turnaround plan to refurbish 600 stores, build out a network of smaller stores, and drive up digital innovation. He’s counting on that huge investment to reverse Target’s declining sales and sluggish grocery business.
“We decided to play the long game,” says Cornell. “We’re really planning the Target of tomorrow.”
In fact, he adds, the Amazon news validated Target’s strategy. “It validated the fact that stores still matter,” explains Cornell. “And even for Amazon, I think that their recognition that a physical presence is important and proximity to the consumer is important.”
Investors don’t see it that way. Target shares tumbled 5% on the Amazon news and the stock has fallen 25% this year. But Cornell says things are looking up and predicts that revenues will increase in the second quarter and earnings will come in better than expected.
Cornell acknowledges that Target has to move with “a greater sense of urgency.” But he is confident that his master plan will pay off big in three years. “Target’s going to be one of the future winners of retail,” he predicts. “And while others are closing their doors and cutting back and trying to save their way to the next quarter, we’re investing for the future.”