Brian Walker, CEO of Retail Doctor Group joined the team at Today Extra this morning to discuss the future of Target as Guy Russo plans to cancel its annual toy sales, stop selling pet care and luggage, ditch in-store cafes and playgrounds and remove all loss-making items in an attempt to overhaul the business.

Guy Russo, CEO of Kmart who was promoted to Wesfarmers ‘CEO of Department Stores’ in order to lead both Kmart and Target in March earlier this year, transformed Kmart from the brink of bankruptcy to a billion dollar business.

As he now begins a similar transformative process with Target, many have been attempting to second guess his next move with fears of the effect it will have on both staff in store and head office, as well as the consumer.

“Target has been trying to be all things to all people for so long” said Brian Walker this morning, and now Russo attempts to put it back on a more strategic path removing all loss-making items and categories.

Speaking at Wesfarmers annual strategy briefing, Russo said only a very small number of Target store would be converted to Kmarts or closed, however he is faced with a major “profit problem”.

“I’ve got $3.4 billion worth of revenue and giving none of that back to anyone. Step one, you take $1 through the till, you’re meant to give five cents back to someone. Not zero or negative. I’m fortunate that we’ve got that revenue. Now I’ve got to teach the team that instead of driving an Uber Black, maybe take the tram. We’ve got to get rid of costs that pre-restructure were taking 1 or 2 per cent of EBIT.”

Whilst this task may seem extremely daunting to many, Russo is confident Target could be coaxed into 10 per cent profit margins: “That’s what I get paid to do.”

So what does this mean for customers?

As discussed on Today Extra this morning, whilst Russo plans to exit certain categories such as pets and luggage that aren’t performing, he will increase the volume on apparel and soft home.

“We’ll exit cafes and give that space back to apparel. There are playgrounds in the children’s area. If a customer wants a playground we’ll suggest they go to the playground.”

Many customers, particularly those with children, have expressed their frustration with Target cancelling lay-by payments for its ‘Greatest Toy Sale On Earth’; however the future of Target could mean lower prices across the board and not just one off sales, with a focus on becoming a go-to every-day low price retailer, with a focus on mid-price fashion apparel.

As mentioned on Today Extra, Brian Walker believes there are further changes ahead in the department store industry as British retailer Debenhams sets to enter Australia in the next year.

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