"The Fidelke Faux Pas" - Target's CEO Succession Controversy | Fast Five Shorts
Target names Michael Fiddelke as next CEO in a move that's sparking industry debate. Sponsored by the A&M Consumer and Retail Group, Mirakl, Ocampo Capital, Infios, and Quorso, Shoptalk’s Ben Miller joined Chris and Anne to break down why this internal succession might be the wrong move for the struggling retailer.
Chris argues this could be "The Fiddelke Faux Pas" while Anne offers a contrarian view on why an internal candidate might be Target's only hope.
For the full #fastfive episode head here: https://youtu.be/M4FL5AO9AAM
#Target #CEO #MichaelFiddelke #Debate #Retail #Strategy
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Transcript
Headline number one.
Speaker A:We teased it last week.
Speaker A:Chris had a big article that he put out over the weekend.
Speaker A:Target has named Michael Fidelke, its current Chief Operating officer, as its next CEO.
Speaker A: st of: Speaker A: chief cheap chic retailer in: Speaker A:Fidelke laid out three priorities.
Speaker A:One, re establishing Target's reputation as a retailer with stylish and unique items.
Speaker A:Two, providing a more consistent customer experience and three, using technology more effectively to operate an efficient business.
Speaker A:Chris, we're going to go to you first because this is the put you on the spot question from the A and M consumer and retail group.
Speaker A:They want to get this show started off right and address the elephant in the room.
Speaker A:CEO succession plans can be difficult regardless of credentials as a Target lifer.
Speaker A:Can Michael Fidelke emerge from Brian Cornell's legacy and change the trajectory of Target, especially with Brian Cornell still on the board?
Speaker A:Or should the next CEO have been from outside the company to kickstart a fresh perspective on Target strategy?
Speaker B:Oh, wow, that's a great question, candidly.
Speaker B:And I said in my article over the weekend, you know, I, I think it's, I think it's the wrong move, you know, and I, I, I'm kind of more excited to hear what you guys have to say because I feel like I penned my thoughts pretty, pretty diligently and robustly in the article I put forward on the weekend, like you said, Anne, but you know, I'm going, so I'll make this quick.
Speaker B:But I think what I'm, I'm going to coin the phrase here that this is going to be the Fidelki faux pas.
Speaker B:That's the new term I'm going to use because I think in the long run this whole move could be embarrassing for every single party involved.
Speaker B:It could be embarrassing for Fidelke, it could be embarrassing for the board, and it's definitely going to be embarrassing for Cornell, I think, because not only is it the wrong move, but it's also a move to me that says far more about Cornell than it does about Fidelke.
Speaker B:So, you know, Cornell, I've been talking about it ad nauseum on this show for the past three years.
Speaker B:His track record is subpar, you know, excluding the two years of the pandemic, particularly what has he really accomplished when you look at the numbers why is Target better positioned to succeed than when he took over in the long run?
Speaker B:Where are the growth strategies?
Speaker B:I still can't name them.
Speaker B:I looked through the earnings report again this week.
Speaker B:I still can't find them.
Speaker B:And what worries me is that Cornell is also not going anywhere.
Speaker B:He's still the executive chairman.
Speaker B:And this didn't strike me until, you know, preparing for this, too.
Speaker B:He doesn't even leave until February.
Speaker B:He's still enrolled until February 1st.
Speaker B:That's a half year away, which is just the holiday.
Speaker A:That's the big thing, right?
Speaker B:Yeah.
Speaker B:Yeah.
Speaker B:You got to still go through the crux of the retail season here, too.
Speaker B:So I don't know.
Speaker B:So then you got to ask yourself, why would Cornell do this?
Speaker B:And I think the only answer I can come up with, and people may not like it, or they may, but I think it's protected to protect his legacy.
Speaker B:The last thing he wants.
Speaker B:The last thing Cornell wants is someone external coming in and showing him up, because then he can't write the memoir like all his CEO friends.
Speaker B:And this avoids that.
Speaker B:It also gives him someone now to share accountability with.
Speaker B:So, you know, is Fidelke the best internal candidate?
Speaker B:Probably, but he runs operations.
Speaker B:Operations haven't been going well.
Speaker B:And what worries me the most, and this is something I didn't put in the article overtly, which I probably should have, is that is that we could put as many pictures of stores and empty shelves as we want on social media, and people have been doing that, so the cows come home.
Speaker B:But I think the more important mark on this regime is actually their digital performance.
Speaker B:The fact that their digital performance in the last quarter was only 4%, that is not even keeping pace with the market.
Speaker B:And it's the same cast of characters, particularly with Fidelki at the helm, that are.
Speaker B:That have been responsible for that and seemingly still are responsible for that.
Speaker B:So that's why I question this move.
Speaker B:It just doesn't seem to make sense.
Speaker B:And I 100% agree, or I don't know if I agree.
Speaker B:But to answer A and M's question, I think they should have gone external.
Speaker A:Sure.
Speaker A:Ben, what are you hearing?
Speaker A:And, you know, Chris and I are obviously very close to Target, having worked there, both of us.
Speaker A:But what are your perspectives and what are you.
Speaker A:What else are you hearing in the industry?
Speaker C:Oh, thanks, Anne.
Speaker C:And it's been, you know, it's been nice to have a week since this story broke to.
Speaker C:On it and.
Speaker C:And to read a lot of commentary.
Speaker C:You know, there's been an awful lot published.
Speaker C:I thought if people haven't read Chris's blog, it's a great read.
Speaker C:It's very well written.
Speaker C:Whether you agree or not, it's very well written and very.
Speaker C:And really insightful.
Speaker C:So well done.
Speaker C:Chris.
Speaker C:Thank you for taking the time to.
Speaker C:To put your thoughts.
Speaker C:And I think the first reflection I've had is the sheer volume reflects the passion that exists around the retailer.
Speaker C:It's really clear that Target is a brand that means a lot to a lot of people.
Speaker C:Everybody's got a view, everybody wants to have a view.
Speaker C:And I think I'm one of those.
Speaker C:When Target's good, it's great, it's exciting, it brings design to mass.
Speaker C:It's been an incredible platform for exciting brands to launch and to scale.
Speaker C:So first up, I wish the team all the best in.
Speaker C:In the turnaround.
Speaker C:However, that takes place on Fidelka.
Speaker C:I've only met him once.
Speaker C:That was a shop Talk Spring in 23.
Speaker C:When he spoke, he was a pleasure to deal with.
Speaker C:He was great on stage, if any, if you or any of the listeners can remember.
Speaker C:The room was absolutely packed.
Speaker C:It was clear he was the nominated successor.
Speaker C:So, look, I have nothing but positive perceptions from that one engagement.
Speaker C:But that doesn't make it look.
Speaker C:That's absolutely no foundation for me to judge whether it'll be a good CEO or not.
Speaker C:So, yeah, I'm not going to.
Speaker C:I think it's important to not underestimate the difference between being an executive and being a CEO.
Speaker C:It's a completely different job.
Speaker C:And sometimes you just don't know until the person's enrolled.
Speaker C:You just don't know.
Speaker C:I guess what I probably would share is a personal reflection and that I talked a little bit in my introduction about my career.
Speaker C: I was in New York in February: Speaker C:I was meeting retailers, I was meeting with brands.
Speaker C:I had coffee with Joe Laszlo and then bang, I didn't.
Speaker C:I wasn't in the US again until grocery shop in 22.
Speaker C:That was just shy of three years.
Speaker C:So I didn't live through the pandemic in the us.
Speaker C:I got this view of the world before and then suddenly the world after.
Speaker C:And when I, when I came, flew out to Vegas for grocery shop in 22, the first thing I did was go out and see some stores.
Speaker C:And there was, there was two, there was two operators that shocked me about how much worse their customer experience had got.
Speaker C:During that period, from having that before and after contrast, one was Target and the other was Starbucks.
Speaker C:The in store standards of both had really deteriorated.
Speaker C:And then from there they got worse.
Speaker C:And I know rather than being part of a gradual change, I got to see this quite upfront.
Speaker C:And I guess what I'm pleased about is that both those retailers have recognized that they weren't serving their customers well enough.
Speaker C:The situation had to get worse from there, but they're both turning around.
Speaker C:So I guess to come back to the A and M question, I think Starbucks is a cautionary tale for us all about getting too excited too early about an external hire.
Speaker C:Turnarounds like this, huge brands take time.
Speaker C:They need a huge amount of patience and they need a huge amount of goodwill.
Speaker C:And if Fidelki can get that goodwill going and can get his team on side, then he's got a chance.
Speaker C:But he's got a phenomenal amount to right connect.
Speaker C:I don't underestimate the challenge that lies ahead.
Speaker C:So I think obviously time will tell if he's the right hire or not.
Speaker C:I don't think there is a playbook of whether it should be external or internal.
Speaker C:It comes down to individual all, and you've got to find out.
Speaker C:I mean, the final thing I'll say is it will come as probably no surprise to you both that we have got cobbles in with both the Target team and the Starbucks team, inviting both Brian and Michael to keynote at Shop Talk next year.
Speaker C:So yes, if any of their personal teams are listening and that invite hasn't hit their desks yet, then just ping me on LinkedIn.
Speaker C:But I think we all want to know what is the strategy?
Speaker C:Because there has to be more than those three big bullet points you put out on a video on social media.
Speaker C:Right?
Speaker A:I agree and I appreciate your perspective, both of you.
Speaker A:And Ben, I think you called out a lot of really good points there.
Speaker A:There is a big turnaround at hand and I'm gonna just offer a slightly different perspective because I think it's easy to throw this decision under the bus, to throw Fidelki under the bus, to dismiss him as the media has been because he's an internal candidate.
Speaker A:But let me just play devil, devil's advocate here and say, what if Fidelke is the only person who can care, who can turn this brand around?
Speaker A:Not to mention he's boots on the ground in Minneapolis.
Speaker A:The same couldn't have been said for Cornell.
Speaker A:Fidelke has been there his entire career and it's not the decision that people wanted or expected.
Speaker A:It's not going to be easy.
Speaker A:He's going to have to say some hard things and make some hard decisions with peers that he's grown up with within the organization, which is a big question mark, as a former Targeteer and mentor of mine said to me this week.
Speaker A:But I just wonder if, if you brought in an external candidate, would they give Target their, their entire selves to make this transformation?
Speaker A:I don't know.
Speaker A:I don't know that I could see that happening.
Speaker A:And so my question and my hope for Target and for fidelity is that he's seen Targets good, he's seen what it can be and now he's in a position still with Cornell at the head of the board, but he's in the position to start making some of these decisions.
Speaker A:And I really, truly hope for the sake of all of those people still at Target, all the people who love shopping the brand, that he's the one person who has the experience to make the brand what great again and what it really can be.
Speaker A:And especially if he can focus on, on bringing that design perspective and point of view that Target has lost throughout the years.
Speaker B:Ben, what do you think on that?
Speaker B:I mean, I have a lot of thoughts on what.
Speaker B:And just said what do you think there before I.
Speaker C:Before.
Speaker C:I know.
Speaker C:I think a lot of what Ann says makes a lot of sense.
Speaker C:A lot of sense.
Speaker C:And you can believe in that.
Speaker C:I think the point about you've seen Target when it's good and how to get back to this because when I did those store visits that first day in Vegas, the one retailer that stood out to me that was so much better coming out the pandemic in terms of in store standards, in terms of operations, in terms of proposition was Walmart.
Speaker C:So what happened during that time is Walmart went one way and Target went the other.
Speaker C:Target's opportunity now is to be the best Target it can be.
Speaker C:Not try and copy Walmart or try and copy.
Speaker A:Exactly.
Speaker C:And how can it find the best Target?
Speaker C:Because there's a, there's a gap in the market for that.
Speaker C:It's just about chasing the right things and you know, a leader who understands that could be well placed.
Speaker C:I have my reservations.
Speaker C:I think the city and the street haven't been excited but you know, post 3, 4% comms in the next quarterlies and they'll be fine.
Speaker C:So, you know, I think, I think you've just got to see what he can do and how he can bring the team along in the way you say I'm.
Speaker B:My only caveat with what you said though, Ann, is like, I think, I think we're lowering the bar of expectations if it's just based on who cares about getting the job, like, and who cares about the brand.
Speaker B:Like there's a lot of people that meet that qualification.
Speaker B:And I can name X people at Target that are now at other companies that are doing well, that have more merchandising and digital experience than Fidelke does.
Speaker B:And I'm curious if they got a sniff at by the board.
Speaker B:I'm curious.
Speaker B:There's been a lot of comments on social media about how long this external search actually happened, if it did in fact happen.
Speaker B:So like that's where I'm like, yeah, I can see what you're saying.
Speaker B:But like that bar is really, really low.
Speaker B:If that's all we're basing this judgment on.
Speaker B:You know, again with the other point being what's been happening at the company with the people in the roles that they've been in, like they've been the ones in charge of this.
Speaker B:And so I don't know, that's, that's just my one, my one caveat with what you said.
Speaker B:But you, I give you the last word and then we'll move on.
Speaker A:Yeah, I think meaning the only, the only counterpoint I'd say is, you know, Fidelity wasn't the CEO, you know, it was a, it was a, he was part of the executive team but he wasn't the one making the final decision.
Speaker A:And so my, my hope is again, like if he's in role, he has a big, big task ahead of him.
Speaker A:And I don't want to diminish the point of like he's grown up with all the other people who are in the executive roles right now at Target.
Speaker A:Like it's not going to be easy to tell those people in merchandising, in marketing, in you know, ops and supply chain the hard truths to get Target to where it's not going to, it's going, it's got to be.
Speaker A:But you know, can, can he do that?
Speaker A:And if he can, hopefully it, it's a, it's the last hope for the brand.
Speaker B:But again, if we're giving dispensation for that conversation, that's a, that's a red flag to me too because every CEO should be able to have that conversation, which another mentor mine said, like the other point would be is this a job that's just too big for a first time CEO?
Speaker B:Like that, that's a legitimate question too.
Speaker B:I think Ford should be asking as well, like, do you need to know how to be a CEO to run target given the challenges that are in front of it, especially from a growth standpoint.
Speaker B:That's another thing that I think needs to be looked at.
