Just days before Chief Executive Gregg Steinhafel resigned from Target Corp. , a small group of senior executives huddled together to discuss ways to improve the flagging retailer’s fortunes. Shortly after their gathering on May 2, executives delivered a message to the board: If Mr. Steinhafel didn’t leave immediately, others would.
The following Monday, the CEO was out. Several top managers are now leading the Minneapolis company until a permanent replacement is found.
The sequence of events, according to people close to the situation, was the climax of a tense narrative that had been playing out within Target’s top ranks—even before a massive credit-card data breach and a money-losing expansion into Canada exposed serious weaknesses in the chain’s operations.
The big-box retailer was long known for a “cheap chic” style that drew shoppers looking to spend $20 on everyday basics but who left with $100 worth of “impulse purchases”—items they didn’t expect to buy. The creative force behind Target’s hip image was fueled by a freewheeling corporate culture where executives walked stores with board members and managers had the latitude to make their own calls on everything from product picks to special promotions.
But interviews with more than two dozen former and current Target executives, managers and vendors reveal a deep malaise within a chain that, increasingly, had lost its way. Management became mired in a new thicket of bureaucracy. Creative leeway—once the DNA of the chain affectionately dubbed ‘Tar-zhay’—took a back seat to rigid performance metrics.
Some executives took their grievances to Target’s board; one of Mr. Steinhafel’s key lieutenants stopped talking to the CEO entirely, say people close to the matter.
Mr. Steinhafel declined to comment for this article.
Under the former CEO, who needed to adjust to a newly frugal shopper in the wake of the recession, Target’s offerings had become more commonplace, like Wal-Mart Stores Inc. WMT -0.45% ‘s—heavy on food and other consumer staples, former employees say. Fewer new products were introduced.
Date: June 23, 2014