New Target CEO lays out his plan to revive troubled retailer

One month into his new job at Target's top executive, Brian Cornell's vision for the company is taking shape.

In a speech at the company's annual employee meeting Wednesday, the new CEO laid out elements of his strategy and his expectations for the struggling retailer.

Chief among them are making Target a leader in fashion, clothing, home, beauty, babies, children and wellness. It's a plan that some think makes sense, but others don't.

Cornell told employees that Target's "Expect More, Pay Less" mantra is key to redefining the company. But he said, "We start by expecting more from ourselves."

Although Target's U.S. store traffic has declined every quarter for almost two years, it can distinguish itself in the categories Cornell wants to emphasize, Edward Jones retail analyst Brian Yarbrough said.

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"Fashion, clothing, home...those are categories that they can bring in a lot exclusive products, a lot of fashionable products at a good value [so] that they can differentiate themselves from the Walmarts and the Amazons," Yarbrough said. "Everyone used to call them 'Tarjay' several years ago and they were so known for the apparel and home items. They kind of lost their way over the last 18 to 24 months."

Yarbrough especially likes Target's chances of grabbing a bigger share of baby product sales. He said only two other major retailers, BabiesRUs and Bed Bath and Beyond, focus on the baby crowd.

"I think there's an opportunity there to put a little more focus on customer service, improve the product offering," he said. "They could really do some damage and take some share in that category."

Yarbrough said wellness is another smart area of focus, given strong consumer interest in health and natural and organic foods. He said if the company can capitalize on the opportunities in the sectors Cornell wants to emphasize, the retailer could really get back on track.

But retail consultant Howard Davidowitz believes Cornell is taking Target in the wrong direction.

"America is not where he is with this plan," he said. "The American middle class, that is the target shopper, is in a financial crisis. They're in survival mode."

Davidowitz says Target needs to pay more attention to what people need than what they want. He said Target is wrongly looking to its past to try to figure out its future.

"He's looked backward at what Target was great at, probably still is very good at," Davidowitz said of Cornell, a former PepsiCo executive. "But you don't look at yesterday for a future strategy."

Davidowitz said he's also not heard anything from Cornell so far that indicates Target can become more of a force in online retail.

Target has said its online sales account for between 2 and 3 percent of its total sales. That includes goods ordered online but picked up at stores.

The retailer has been trying to ship goods faster to customers and it has sweetened its free shipping offer, providing no-cost delivery for virtually all online purchases of $50 or more. It also is making several thousand more items eligible for free shipping.

Target also continues to see customers embrace its REDcards, which provide a 5 percent discount on all purchases made with the cards. Those debit and credit cards account for about a fifth of the retailer's sales.

During the employee meeting, other Target executives vowed the company would regain its swagger and among other things "win the Canadian market."

So far, however, things have not been going well up north for Target. The company has lost more than $1 billion during its foray into Canada. That may be Cornell's biggest challenge.