Target ranked 25th on Fortune’s listing of the 50 Most Admired Companies, which is the lowest level in the past six years. The decline could be viewed as troubling, but only if you buy into the notion that the list is the definitive report card on corporate reputations.
It is not, at least as far as retailers are concerned. In 2011 and 2010, Target was ranked 22nd, down from 2009 when it was ranked 19th and considerably below 2008 when it nearly broke into the top 10 with a ranking of 11th after a ranking of 13th in 2007.
Being included on such a list is a welcome accolade for any company, and it beats the alternative, but such inclusion and ranking is ultimately irrelevant for Target or any of the other retailers (Costco, 20th; Nordstrom, 21st; Walmart, 24; Whole Foods, 28th). The reason why has to do with the methodology behind the rankings and ultimately the issue of admired by whom and for what?
The “for what” part is easy. Fortune looked at what it determined to be such key attributes of reputation as innovation, people management, use of corporate assets, social responsibility, quality of management, financial soundness, long-term investment, quality of products and services and global competitiveness. Kind of interesting that Target ranked second on global competitiveness among the general merchandise retail segment since it doesn’t yet operate international stores.
The “by whom” piece is less clear. Since we are talking retailers, the most relevant views on reputation would be those of actual shoppers, but Fortune’s survey is based on responses from 3,855 executives, directors, and securities analysts who had responded to industry surveys to select the 10 companies they admired most. They chose from a list made up of the companies that ranked in the top 25% in last year’s surveys, plus those that finished in the top 20% of their industry. Anyone could vote for any company in any industry, according to a description of the methodology provided by Fortune.
The publication’s survey partner started with approximately 1,400 companies and then sorted those by 58 industries and selected the 15 largest for each international industry and the 10 largest for each U.S. industry. A total of 698 companies from 32 countries were surveyed.
It all begins to sound convoluted and really irrelevant as far as retailers are concerned because the best measure of reputation in the retail industry is the number of people coming in the door and how much money they spend.