Target CEO Brian Cornell walks through a presentation of creations by fashion designer Joseph Altuzarra that will roll out at stores this month. THE WALL STREET JOURNAL
Target Corp.'s new CEO plans to double down on a just a handful of departments like baby products and fashion, a strategic shift as the discounter works to bring shoppers back to its stores and better compete with online rivals.
The change comes as the advantage of big-box stores' giant assortments is fading. Internet retailers like Amazon.com Inc. offer an almost bottomless range of products, and shoppers are defecting to stores that are easier to navigate.
Just a month into his job, Chief Executive Brian Cornell is seeking to bolster a small number of categories that could help the chain stand out.
"We've got to major in these signature categories and make some bold changes to re-energize those businesses," Mr. Cornell said in an interview. "All categories can't be prioritized the same."
The areas that will get extra attention, investment and pressure are baby products, including diapers, clothes and gear; children products, including clothes and toys; "design and style," a catchall category for fashion, furniture and other products that once gave Target its edge; and wellness products like organic food and natural cleaning products.
Mr. Cornell inherits a retailer that has been struggling for a few years under his predecessor, Gregg Steinhafel. The former CEO, who resigned in May, oversaw a culture that took fewer risks on hot fashion trends and focused more on everyday goods. His downfall was the handling of last holiday's cyber attack, where 40 million credit- and debit-card numbers were stolen, an episode that is getting fresh attention given the recent security breach at Home Depot Inc.
With the new strategy, the retailer is laying more responsibility on suppliers to be on trend and find products that will give Target an edge.
The focus will extend to Target's marketing, which in recent years has been used to plug new initiatives like the broader grocery selection. "We had a message that got too diffused," Target Chief Marketing Officer Jeffrey Jones said.
Mr. Cornell expects to outline his strategy Wednesday during a keynote at Target's annual employee meeting in Minneapolis. The talk may cause hand-wringing among merchants overseeing categories not given a special status. Target isn't exiting any major categories as part of the new mandate, Mr. Cornell said.
"Those other categories have important roles to play, and category by category, that has to be defined," Mr. Cornell said.
The new strategy is a significant about-face for a business that for decades has pushed to build bigger stores offering everything from toilet paper to televisions and camisoles to carrots. While one-stop shopping worked for years, chains like Target and Wal-Mart Stores Inc. are finding that scale is a disadvantage in the wake of the recession, as shoppers seek out smaller stores closer to home.
Early this year, Wal-Mart accelerated a buildup of smaller store formats. Target, where U.S. customer traffic has fallen for seven straight quarters, is also starting to open more smaller-size stores, something Mr. Cornell is examining closely as a way to tap into urban shoppers.
Target's top leadership laid groundwork for the new strategy in the months between former Mr. Steinhafel's departure in May and Mr. Cornell's arrival last month. Some of the work is already evident. The chain started carrying high-end baby products from Jessica Alba's Honest Co. in June. It is also adding mannequins as part of a redesign of its apparel sections and plans a complete overhaul of its toy department next year. Some of its food aisles also call attention to organic, natural and other better-for-you products.
Fashion and furniture have long been hallmarks for the fourth-largest U.S. retailer by sales, especially during its rapid growth in the 1990s and early 2000s. But Target's recent forays into areas like groceries and everyday consumables have shifted attention away from the modern housewares and other goods that helped define Target as an on-trend retailer.
Mr. Steinhafel led Target's push into groceries as a way to get people to visit more often. In the year than ended in February, 46% of Target's sales came from everyday household goods and grocery, up from 32% five years earlier. The shift worked, reversing a drop in same-store sales after the recession, but former executives and analysts have said it left Target with fewer items that stood out.
Mr. Cornell, who ran Wal-Mart's Sam's Club division before leading PepsiCo Inc.'s Americas Foods business, is still evaluating what role grocery will play at Target. "Clearly, it didn't make the top list of categories, but over the next few months, we're going to decide what we stand for in the food space," he said. "That's a work in progress."
Mr. Cornell has been visiting stores in Minnesota, California and Virginia—as well as in Canada, where a bungled expansion will require hard decisions on how to stop the bleeding.
Last week Mr. Cornell, who has faced some concerns that he brings too much of a food background to a style-minded retailer, spent a few days in New York City visiting places like Story, a Chelsea store that rotates its entire merchandise lineup every few weeks by theme. This month's theme is style meeting technology, showing off activity trackers built into watches and jewelry that beeps for text messages.
As he was ushered in a black SUV to the SoHo storefront of Bonobos, a menswear retailer that started out online, Mr. Cornell mused about how some e-commerce players have decided they need a physical location. At the store, Bonobos was beginning a month-long promotion with Birchbox, an online retailer that sends grooming products to subscribers.
Mr. Cornell, a history buff who enjoys Civil War books, values an historical perspective and has spoken with former Target executives, including Robert Ulrich, the former chairman and CEO who led the company's rapid growth in the two decades before retiring in 2008. Mr. Cornell visited Mr. Ulrich's suburban Minnesota home shortly after starting. Over pizza, beer and wine, they talked about Target's history and other topics.
The former executive—who rarely speaks to the press and who, after stepping down from the board in 2009, had little contact with Mr. Steinhafel—said his initial impression of Mr. Cornell was good. "He seems like he's bright, logical, a good critical thinker," Mr. Ulrich said. "I think he's got a very solid approach."
Mr. Cornell said he understands that retailing has radically changed since Mr. Ulrich ran Target.
"This isn't going back to the future," Mr. Cornell said. "You've got to be thinking about tomorrow and building the strategy about the future."