Target turnaround still within reach
THE former head of struggling retailer Target, Launa Inman (pictured), believes stablemate Kmart has succeeded in recent years partly by elbowing its way into Target’s traditional market, especially on price.
Ms Inman, who ran Target from 2005 to 2011, says the department store chain must now reposition itself to survive.
Speaking after appearing at a retail conference in Melbourne yesterday, she said Target had lost some of the core elements that in the past had made it a popular destination for shoppers.
Target was now being overshadowed by its much stronger counterpart Kmart, with both chains owned by Perth-based conglomerate Wesfarmers.
Ms Inman, currently a director of the Commonwealth Bank and baby food producer Bellamy’s Organic, said she believed Target could once again shine under its new leadership.
Guy Russo, who was previously managing director of Kmart alone, was promoted this year to lead both stores.
But the turnaround of Target — which suffered an operating loss of $195 million in the year to June and triggered $1.27 billion in impairment charges on Wesfarmers’ books — would prove tough as Kmart soared, Ms Inman said.
“I think firstly that will be a challenge because Kmart have really done an outstanding job in the sense they have moved a little into the space that Target previously had,’’ she said.
“And by that I mean when I was running Target, we always talked about three elements — style, quality and value.
“We were never the cheapest in the market, but it was very much about the democratisation of fashion and we really believed we could be as fashionable as department stores or specialty stores but at prices 30 to 40 per cent less.”
Ms Inman said that at the time, Kmart was going through a transformation, cutting the number of lines it sold and reducing prices.
She said that since then, “one of the things they have really done well ... is really taking that style element”.
“Their stores look excellent, they really do.
“So it’s going to be hard now for Target to reposition itself because they have lost some of that high ground, but can it be done. I’m sure it can be done.”
Target has lost its way over the past six years, racking up losses and churning through chief executives.
In Ms Inman’s last year at Target, the retailer posted an operating profit of $280 million, on revenue of $3.78 billion. Since 2011, sales have hardly budged. They were $3.5 billion in the year to June.
The chain has also had three chief executives since Ms Inman left.
Ms Inman said Target would need to review its pricing structure and once again capture the advantage in terms of its competitive edge.