January 10, 2008
Ulrich Retiring, Steinhafel Taking Over at Target
Target Corp. announced yesterday that CEO Bob Ulrich is retiring from the company and that his longtime lieutenant Gregg Steinhafel would be taking over at the helm of the retailer.
Mr. Urich leaves the company 41 years after joining Target’s predecessor, Dayton Hudson, as a merchandising trainee. While he will step down as CEO on May 1, he will remain as Target’s chairman until Jan. 31, 2009.
Mr. Steinhafel, Target’s president, joined Dayton Hudson in 1979 and moved up the ladder. He was appointed to the retailer’s board last year. He takes over at the retailer after a decidedly less than Target-like performance in the past quarter.
The expectation is that Target under Mr. Steinhafel will be much the same as it was under Mr. Ulrich.
Joseph Feldman of the Telsey Advisory Group told the Minneapolis/St. Paul Business Journal, “The new guy is really the old guy. He’s been Bob’s partner for the past 30 years, essentially, and he’s been an integral part of the strategy.”
Mr. Steinhafel echoed much the same in company press release. “I am fortunate to have had the opportunity to learn from one of the best leaders in the retail industry and I look forward to building on the company’s success by continuing to create substantial value for our guests, our team members, our shareholders and our communities,” he said.
With Mr. Ulrich leaving the questions inevitably lead to his legacy and the future of the company he helped to build.
Burt P. Flickinger III, managing director of Strategic Resource Group, offered his view in an interview with The Associated Press. “Target seemed to have lost its way in the last few years of Ulrich’s tenure. In the history books he’ll go down as a very good but not great CEO. Steinhafel, I think, will go down as a great CEO.”
Discussion Questions: What do you see as Bob Ulrich’s legacy at Target? What do you expect of Target under Gregg Steinhafel’s leadership? What do you see as the most pressing challenges he will face as he takes over as CEO?
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Bob Ulrich’s legacy at Target will be the changes in the company’s culture to make a different statement to consumers about the company’s image, trends, and points of differences.
Gotta love pundits. Criticism is what they do and it’s a crucial part of the way things work in a capitalist society.
But I can tell you that Ulrich is undeserving of the harsh criticism that’s based on a few less than perfect quarters. His legacy is centered on having built an original organization that is an incredible machine, staffed with retail’s best and brightest. This is why everyone else in retail suffers chronic Target envy.
While Circus Elephant Syndrome runs rampant in the retail world, these guys can’t even imagine what it would be like to blindly follow anyone. That’s Bob’s legacy. Good luck Bob. Let me know if you’d like to consult between fishing trips.
My suspicion is that weak comps are likely to merely presage even weaker earnings. The challenge for Target, as it will be for many others, will be to develop strategies to improve gross margins in the face of ever increasing price competition. For Target, this means focusing on their core strength in developing compelling fashion assortments that can better command higher margins and protect pricing integrity.
Same place, different face. This strategy is certain to be one that the board likes, the customer is comfortable with, and the organization continues with for at least the first 8-12 months after the transition. The true impact will not be felt until after January, 2009 when Ulrich is entirely out of the picture and Steinhafel has had a chance to spread his corporate wings.
Well, it appears his biggest challenge has just been announced by the Wall Street Journal.
Comps were down 5% in December–vs. a 2.4% gain (which isn’t what I’d call robust, but is nonetheless better than a loss) for Wal-Mart.
I don’t have a clue why the numbers flipped like that. I’ve assumed Target had way more up-side than WM…but there you have it. Challenge #1–restore comparable store sales growth.
Bob Ulrich made Target the center of retail attention. Solid growth followed and that was a great accomplishment. When Gregg Steinhafel receives the baton in May, he will run with it into many challenges: the slowing economy, tighter consumer budgets, the iconic image of Ulrich that he will undoubtedly be compared with, a rather ambivalent food operation and Wall Street’s high expectations. Steinhafel has been around Target for 29 years, worked on the recent slowdown and knows the risks and rewards. He’s ready and he is worth betting on.
A united, coordinated brand that raised the bar for big-box retailers in general and shown that creativity and vision can produce loyal customers. Something Kmart, Sears and many others seem to continue to miss. I’d say that was a pretty remarkable accomplishment and quite a legacy.
You can’t negate a man’s entire career and what he’s done just because of a couple of lackluster quarters–especially not in this economic environment.
The fact is that Mr. Ulrich, along with Mr. Steinhafel, have changed the face of discount retailing in this country. They are responsible for creating a new competitive dynamic against which every one else is measured.
As an outsider, I see, from time to time, a dullness in Target’s merchandising strategies. But I think this is largely due to inadequate store level execution in some places by managers who have the opportunity to be independent thinkers but don’t exercise it.
I expect Target to remain something of a trendsetter in home goods, apparel and increased emphasis on Archer Farms private label products. Any hiccup in operations now is temporary. Expect some new surprises.
Bob has done an amazing job here–calling him anything less than a Great Leader is simply wrong…no other retailer (ok bar 2-3) has provided consistent, focussed leadership while simultaneously engaging with all stakeholders.
Hats off to Bob!
I find Mr. Flickinger’s comments a little harsh: Like many other retailers, Target has endured a disappointing 2007 but it’s hard to fault the company’s focused brand positioning and consistent execution for almost all of Bob Ulrich’s tenure. (Full disclosure: I worked briefly at Dayton’s early in my career under Bob’s leadership.) The company grew stronger over the years by never forgetting its roots in department-store trend merchandising.
Greg Steinhafel does have an opportunity to be an agent of change, following a year in which Target’s value message and overall marketing effort was not at its best. But I wouldn’t expect him to turn things upside down given his own long tenure and the long-planned transition from Bob Ulrich’s leadership.
Robert Ulrich has been a great mentor and model for the senior team, his style is to always push success, credit and ideas off himself and onto others. In 1994 when Bob became CEO, Target’s stock grow from under $6 to more than $60 today. And the Target brand has become one of the strongest and best known brands in the US.
And, he has been an innovator. In the quest for organic growth, Ulrich has pushed for innovation in areas where it isn’t often found. Food, considered a commodity by most, represents a huge change in Target’s strategy that didn’t exist 10 years ago when sporting goods, home improvement and automotive categories were more dominant. Similarly, Target is committing far more to pharmacy than it did a decade ago.
Customers also show a growing appetite for the store’s own food brands, such as Archer Farms, Market Pantry, Sutton & Dodge and Choxie. From virtually nothing in 2001, the store’s private label food business is 15 percent of current sales and could be as much as 25 percent in four years.
Gregg Steinhafel has experience, focus and most importantly been exposed to how business goes from “Good To Great.”
It’s a boring hackneyed saying: “In retailing you have to prove yourself every day.” Target built a legendary organization and a legendary brand. But the stock price was $60 a year ago and it’s $50 today. The comp sales are poor and investors are pressuring Target to sell the credit card division. It’s hard to turn the sales around and it’s hard to sell the credit card division profitably when investors are worried about credit defaults. If Gregg Steinhafel can deliver better financial results, he’ll be a hero.
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Bob Ulrich’s legacy at Target will be the changes in the company’s culture to make a different statement to consumers about the company’s image, trends, and points of differences.
Gotta love pundits. Criticism is what they do and it’s a crucial part of the way things work in a capitalist society.
But I can tell you that Ulrich is undeserving of the harsh criticism that’s based on a few less than perfect quarters. His legacy is centered on having built an original organization that is an incredible machine, staffed with retail’s best and brightest. This is why everyone else in retail suffers chronic Target envy.
While Circus Elephant Syndrome runs rampant in the retail world, these guys can’t even imagine what it would be like to blindly follow anyone. That’s Bob’s legacy. Good luck Bob. Let me know if you’d like to consult between fishing trips.
My suspicion is that weak comps are likely to merely presage even weaker earnings. The challenge for Target, as it will be for many others, will be to develop strategies to improve gross margins in the face of ever increasing price competition. For Target, this means focusing on their core strength in developing compelling fashion assortments that can better command higher margins and protect pricing integrity.
Same place, different face. This strategy is certain to be one that the board likes, the customer is comfortable with, and the organization continues with for at least the first 8-12 months after the transition. The true impact will not be felt until after January, 2009 when Ulrich is entirely out of the picture and Steinhafel has had a chance to spread his corporate wings.
Well, it appears his biggest challenge has just been announced by the Wall Street Journal.
Comps were down 5% in December–vs. a 2.4% gain (which isn’t what I’d call robust, but is nonetheless better than a loss) for Wal-Mart.
I don’t have a clue why the numbers flipped like that. I’ve assumed Target had way more up-side than WM…but there you have it. Challenge #1–restore comparable store sales growth.
Bob Ulrich made Target the center of retail attention. Solid growth followed and that was a great accomplishment. When Gregg Steinhafel receives the baton in May, he will run with it into many challenges: the slowing economy, tighter consumer budgets, the iconic image of Ulrich that he will undoubtedly be compared with, a rather ambivalent food operation and Wall Street’s high expectations. Steinhafel has been around Target for 29 years, worked on the recent slowdown and knows the risks and rewards. He’s ready and he is worth betting on.
A united, coordinated brand that raised the bar for big-box retailers in general and shown that creativity and vision can produce loyal customers. Something Kmart, Sears and many others seem to continue to miss. I’d say that was a pretty remarkable accomplishment and quite a legacy.
You can’t negate a man’s entire career and what he’s done just because of a couple of lackluster quarters–especially not in this economic environment.
The fact is that Mr. Ulrich, along with Mr. Steinhafel, have changed the face of discount retailing in this country. They are responsible for creating a new competitive dynamic against which every one else is measured.
As an outsider, I see, from time to time, a dullness in Target’s merchandising strategies. But I think this is largely due to inadequate store level execution in some places by managers who have the opportunity to be independent thinkers but don’t exercise it.
I expect Target to remain something of a trendsetter in home goods, apparel and increased emphasis on Archer Farms private label products. Any hiccup in operations now is temporary. Expect some new surprises.
Bob has done an amazing job here–calling him anything less than a Great Leader is simply wrong…no other retailer (ok bar 2-3) has provided consistent, focussed leadership while simultaneously engaging with all stakeholders.
Hats off to Bob!
I find Mr. Flickinger’s comments a little harsh: Like many other retailers, Target has endured a disappointing 2007 but it’s hard to fault the company’s focused brand positioning and consistent execution for almost all of Bob Ulrich’s tenure. (Full disclosure: I worked briefly at Dayton’s early in my career under Bob’s leadership.) The company grew stronger over the years by never forgetting its roots in department-store trend merchandising.
Greg Steinhafel does have an opportunity to be an agent of change, following a year in which Target’s value message and overall marketing effort was not at its best. But I wouldn’t expect him to turn things upside down given his own long tenure and the long-planned transition from Bob Ulrich’s leadership.
Robert Ulrich has been a great mentor and model for the senior team, his style is to always push success, credit and ideas off himself and onto others. In 1994 when Bob became CEO, Target’s stock grow from under $6 to more than $60 today. And the Target brand has become one of the strongest and best known brands in the US.
And, he has been an innovator. In the quest for organic growth, Ulrich has pushed for innovation in areas where it isn’t often found. Food, considered a commodity by most, represents a huge change in Target’s strategy that didn’t exist 10 years ago when sporting goods, home improvement and automotive categories were more dominant. Similarly, Target is committing far more to pharmacy than it did a decade ago.
Customers also show a growing appetite for the store’s own food brands, such as Archer Farms, Market Pantry, Sutton & Dodge and Choxie. From virtually nothing in 2001, the store’s private label food business is 15 percent of current sales and could be as much as 25 percent in four years.
Gregg Steinhafel has experience, focus and most importantly been exposed to how business goes from “Good To Great.”
It’s a boring hackneyed saying: “In retailing you have to prove yourself every day.” Target built a legendary organization and a legendary brand. But the stock price was $60 a year ago and it’s $50 today. The comp sales are poor and investors are pressuring Target to sell the credit card division. It’s hard to turn the sales around and it’s hard to sell the credit card division profitably when investors are worried about credit defaults. If Gregg Steinhafel can deliver better financial results, he’ll be a hero.