Updated: Oct 5, 2020
Fundamentally, not much has changed in the past four years at Target. Target Corporation (TGT) is on the path to take over the consumer retail market as the next K-Mart. After missing earnings estimates in the first quarter of 2016, many analysts attributed the blame to the security breach during the 2015 holiday season. Target missed estimates again in 2020, although weak toys and electronics were to blame in the 2019 holiday season. Weak toys and electronics?! Those are the two staples of the holiday season, how did they miss the mark so bad?
Further research into the operations of Target, it was apparent that traditional bureaucratic management principles are still practiced throughout the organization in a time when technology leaders such as Amazon, (AMZN) are creating greater efficiencies for users to purchase just about anything they need at their fingertips. 20th-century management methods from the Boomer Generation are choking big businesses and creating huge bottlenecks as technology continues to advance at an exponential rate.
After visiting a few different Target stores over a seven-week time frame, the following pictures were taken in disbelief of how horrible store operations have become. Who is to blame for this disaster? Target used to be the higher-end alternative to Walmart, although now Walmart's lower prices and two day delivery are more attractive as the shopper's experience becomes similar.
Boxes are preventing customers from accessing the isle, which is also a fire hazard — products not organized on the shelf and stray carts filled with restocking items. Easter was in March this year, yet holiday products were still available in the middle of April.
A substitute for avoiding the poor quality shopping experience of traditional brick and mortar is to purchase the everyday essentials on Amazon. Target and other B&M retailers will become obsolete unless they adapt to how consumers shop in the information technology era. Rather than expecting customers to come to a storefront, customers are expecting retailers to come to them. Simply setting up shop in every city in America and putting a sign on the front of the building does not cut it anymore. Customers have even more options available with technology. Price elasticity will be reflexive to who can provide consumers with the most convenient and economical process to purchase goods. Thus far, Amazon is miles ahead of the competition as they continue to innovate and utilize new management practices such as SCRUM, to create and complete new strategic business units faster than traditional managers of Target and other B&M companies.
What the hell?!
Business strategies, policies, and procedures must be as nimble as software updates to a company's Information Systems. CEO Brian Cornell employs outdated top-down management practices and relying on reports and countless middle management meetings to review the reports to fill out another report to present to the next level in the management chain, which is then sent to a committee for further review after which revisions are requested and the process is repeated until the work has been approved by all vertical levels of hierarchy to finally come to a decision that can be implemented. This description of the above process demonstrates the tedious and laborious method of decision-making.
However, this does not mean the task was complete, only that a decision was approved to formulate a plan to implement. The implementation team must review all the approved reports to then determine the optimal strategy of execution, and the most effective method of implementation. Occasionally, individuals forget the details in the initial planning phase that may be crucial to the execution. As a result, projects can be suspended in limbo as they get held up in the chain of command. If a project gets to the implementation phase and a revision is required, the project must go back to the beginning and start the approval process over again. These inefficiencies are magnified in a large company as more moving parts and hands become involved in a particular project that will require more effort in managing the project than completing it.
Target has Disneyland long lines with only two registers open. Customers want to buy, although Target provides resistance at the checkout. Imagine if you had to wait 15 mins to buy all the items in your cart on Amazon.
On the other hand, technology companies such as Amazon, employ a management concept known as SCRUM and has proven to be the optimal method to the software development process. SCRUM is not only beneficial to software development, but it instills the mindset that waste is detrimental to every process. These principles are applicable to any project in any industry. Rather than employing five middle managers to work on one project separately and coordinate results periodically, small groups of teams could Plan, Do, Check, and Act on their work immediately. The teams’ results can be made available for cross-organizational applications to determine if the project is on track for on-time completion to the requirements of the end goal.
Companies who choose to update their management principles, and alter their business practices to better serve their customers in the information technology era will overtake those stubborn managers who say, "That's the way it's always been done."