How Target became a model retailer. Especially in the age of Amazon

American retailers, school is in session. The teacher? Target Corp.

Yes, Target. The cheap-chic retailer — in distress just five years ago — has morphed into a model for how to avoid the retail apocalypse.

Over that time, Chief Executive Officer Brian Cornell has overseen a $7-billion turnaround plan that includes opening and remodeling hundreds of stores, creating dozens of exclusive private-label brands and expanding the ways it gets its merchandise into shoppers’ hands.

The results, punctuated by a near-perfect third quarter, have been notable. Target has now reported quarterly same-store sales growth of at least 3% for two straight years, along with wider profit margins in recent quarters. The stock is the best performer by far in the S&P 500 Retailing Index this year.

The performance has analysts agog, with Barclays saying the company is “firing on all cylinders,” and Moody’s Investors Service proclaiming it’s in “rarefied air.” Sanford C. Bernstein even entitled its latest note, “Best Company Ever?”

Although that may be a bit of a stretch, it does show that Target’s playbook has some fundamental lessons for retailers in the age of Amazon.

And recent results from companies including Macy’s Inc., Gap Inc., J.C. Penney Co. and Kohl’s Corp. show that plenty of retailers need some schooling. The laggards blamed their woes on factors such as unpopular products to unusual weather….[Read More]