Seattle, USA – Apr 8, 2020: Late in the day an Amazon Prime delivery van passing Target city on 3rd avenue in downtown.
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Target and Amazon each announced layoffs on the same day last week. Tuesday, October 28th, to be exact.
Coincidence? I think . . . it is more than likely.
But what if it’s not? What if there is more at play here? What if it is a big tell that Amazon could be looking to acquire Target? Or, minimally, that Target is looking to get acquired itself?
While this idea might sound crazy, there is more than enough chum in the water to give it credence.
A Theory Years In The Making
First of all, for years people have been hypothesizing that Target would make a great acquisition for Amazon. The first instance I can recall occurred way back in 2018 when Loup Venture’s Gene Munster predicted the e-commerce giant would buy Target. Obviously, that never happened, but ever since then too many pundits to count have encouraged the move, mainly because they all see a synergy with Whole Foods and Target.
Newsflash: I do not, but more on that in just a few seconds.
“Milk Alongside Electronics”
No, the far more strategic rationale for a Target acquisition plays right into what Amazon CEO Andy Jassy said late last week. In discussing the success Amazon has been seeing with the rollout of same-day perishable grocery delivery, Jassy said, “This is a game changer for customers who can now order milk alongside electronics, check out with one cart and have everything delivered to their doorstep within hours.”
Sound familiar?
It should. Because it sounds exactly why people shop at Target, only the online version of the experience. If I had a nickel for every time someone during my Target career said to me, “I went in for one thing, and left with so much more!” I estimate that, give or take, I’d have about $5,325 by now.
Target’s grocery experience has never been designed like Walmart’s or even Kroger’s. Target has never been the place where you can accomplish your full weekly grocery shopping trip. Sure, there are roughly 200 or so Super Targets throughout the country that approximate the Walmart Supercenter experience, but there are also about 1,800 other stores with a much smaller footprint of groceries, with no meat counter, no deli, etc.
Said another way, Target has always been about the fill-in grocery trip. Smashing Whole Foods into Target for that reason alone would be a bad move. The stores don’t have the footprint and the retrofit would be quite costly.
Second, Target’s supply chain design, i.e. the expansive use of sortation centers, was also designed by ex-Amazon and Target’s former Chief Supply Chain Officer, Arthur Valdez. It is a setup Amazon knows well and one to which Amazon could plug into quite nicely, and one that suddenly gives all its Amazon’s shoppers an “omnichannel” extension into the idea of buying (or picking up at a store) your “milk alongside your electronics.”
But all that is just the Amazon side of the story.
The Red Flag Succession Plan
The recent happenings around Target’s CEO succession are so bizarre that they should give everyone pause, pause to ask, “What the heck is going on here?”
For instance, Target’s outgoing CEO Brian Cornell’s track record is questionable at best (see why here), and instead of the board outright replacing him, it allowed Cornell to stay in his role until February 1, 2026 and named Target’s former COO Michael Fiddelke as his replacement, with Cornell then staying on as executive chair.
Many, including Wall Street, were hoping the board would look outside for Cornell’s replacement, but instead it went internal and kept Cornell in the mix.
Why would the board do this?
Well, one reason could be that the board knows something we don’t and doesn’t want to upset the apple cart, an idea that deserves even more credence when we examine the layoffs last week.
Whose Layoffs Were They Anyway?
For all intents and purposes, last week’s layoffs were Fiddelke’s layoffs. Ever since Target announced its succession plan in late August, Fiddelke has been the public leadership face of Target. Knowing retail as I do, however, layoffs of this size and magnitude take months and months of planning, which also means that they had to have been in the works long before the succession announcement was made.
All of which begs the next big question – why didn’t Cornell announce the layoffs and then hand over the reins to Fiddelke sometime afterward? Or even time the layoffs earlier?
That would have been the move that set Fiddelke up for success. Instead Fiddelke gets saddled with the cultural impact of having to tell the organization that the reason for the layoffs was one of “too many layers and overlapping work slowing decisions, making it harder to bring ideas to life,” a rationale that, as the former CFO and COO, Fiddelke had a big hand in creating.
Successor Or Stopgap?
Is Fiddelke the right man to lead Target for the long-term, or is he just a temporary stopgap who understands the operations and who, with Cornell peering over his shoulder, can hold things in place until the right suitor comes along?
If it is the latter, then Fiddelke is actually the ideal candidate to fulfill the role. He knows the internal workings of Target as well if not better than anyone still working there. If it is the former, then I don’t envy him one bit because Cornell handed him a raging dumpster fire, and it will take a superhero’s effort to bring the culture back and to fix the overall flailing business model at the same time.
I asked Target for comment on all this speculation, both on the timing of the layoffs with Amazon as well as on the idea of Target’s leadership team preparing the company for acquisition, but my request for comment was not returned in time for publication. But then again, if any of the speculation were true, why would and, more importantly, how could Target comment? Target couldn’t comment even if it wanted to do so.
No matter how one slices it, the situation is so strange at Target right now that, for the benefit of the doubt for all who still work there (Fiddelke included), one has to assume Target is clearing the decks for acquisition, right? What other possible explanation could there be?
Because any answer beyond that gets really unsettling, really fast, and doesn’t inspire much confidence in what would result from the proverbial inmates left running the asylum, aka Target’s board and leadership team.