Brian Cornell didn’t know U.S. retail just got rocked.

Last month, the CEO of Target was on a plane when Amazon said it would pay $13.7 billion to purchase Whole Foods Market, an acquisition that would make the Seattle online giant appear even more omnipotent than it already seemed. By the time Cornell landed, his phone was inundated with messages about the megadeal, including breathless headlines that declared the death of physical retail.

But then Cornell received a message from Chief Operating Officer John Mulligan: a photo of the retailer’s sales figures for the day.

“Brian! Look! There are still consumers shopping at our stores today!” Mulligan joked.

It was a lighthearted moment between two men who lead the nation’s second-largest retailer. But the subject matter was serious. Over the next few days, Target stock, along with that of other brick-and-mortar retailers, lost billions of dollars in market value. Cornell arranged for a conference call with the board of directors to discuss the situation.

“It was the topic of conversation everywhere across the country,” Cornell told the annual Stanford Directors’ College in Palo Alto last week. “People are sitting at dinner and asking what just happened and what does it mean?”

It falls to executives like Cornell to answer those questions. Since joining Target as CEO in 2014, Cornell has faced the delicate task of reassuring employees and investors that the company is still strong while acknowledging that the industry is rapidly changing and Target needs to step up its game.

“What we’re seeing today is that ... there’s not a place for poorly run retailers,” Cornell told me in an interview after his speech in Palo Alto.

Target has certainly see better days.

In 2011, Target’s revamped website repeatedly crashed as people tried to purchase items from the retailer’s highly anticipated partnership with Italian fashion house Missoni. Embarassingly, Target had just taken control of the site after Amazon ran it under contract for a decade.

Other problems: the online theft of millions of credit card accounts in 2013, and a humiliating and expensive retreat from its foray into Canada, the retailer’s first attempt at international expansion.

Remarkably, Wall Street largely gave Target, a company traditionally known for strong profit and sound management, a pass on those miscues. But shareholders of late have not forgiven Target for declining store traffic and weak sales growth.

Since 2015, Target stock has dropped 40 percent to around $50 per share. More worrisome, Target — a retailer that through savvy marketing and smart merchandising once occupied the heights of pop culture relevance — seems to have lost its way.

The rapid rise of e-commerce has challenged Target’s identity, said Alicia Hare, a former strategy executive for the retailer.

“Target is at its best is when they have a clean sense of who they are and what they want to deliver,” said Hare, who is now West Coast president of the SYPartners consulting firm in San Francisco. “In this new environment, when consumers want it when they want it, what is the expression of that clean, holistic experience? At the moment, it’s kind of a messy experience. You don’t feel like it is rooted in the soul of the company.

“When companies are disrupted like Target, the No. 1 emotion is fear. Fear creates a lot of different behaviors. If you don’t have the sense of purpose, there is no focus. It’s hard to decide whether we should go left or right.”

Target has always occupied a unique place in U.S. retail, best reflected in its motto “Expect More, Pay Less.” Like Walmart, the company sells staples like toilet paper and shampoo at discounted prices but nabs higher-income shoppers with trendy apparel and home goods.

Target is best known for partnerships with designers like Jason Wu, Michael Graves and Missoni to create exclusive, limited-time assortments that quickly sell out. Target coined the term “cheap chic.” Stores were clean, spacious and well lit.

But two things happened: the Great Recession and Amazon.

The economic crisis from 2007 to 2009 has caused consumers to cut discretionary spending, which continues to hurt Target in key, profitable categories like clothing, accessories and furniture.

For low-margin but fast-selling food and household essentials, Target has lost market share to Walmart and Amazon, whose supply chains far outmatch their rival. Target’s Achilles’ heel has always been inventory: A common complaint is that shelves are frequently empty, and that stores constantly run out of things like bottled water and green bean casserole.

In some ways, Amazon has usurped the “Expect More” mantra from Target. While Target surprised shoppers with affordable luxury in apparel and home goods, Amazon has wowed customers with innovations like Amazon Prime.

“Target has slowly pulled away from the positioning that won it the love and affection of middle America,” said Brian Kelly, a consultant and a former top executive at Sears.

For an annual subscription, Prime customers not only get free shipping but also free access to movies, books and magazines. Like Netflix, Amazon has invested heavily in producing original films such as the Oscar-winning “Manchester by the Sea” and television shows such as “The Man in the High Castle.”

Studies by the Kantar Retail consulting firm show that Target’s greatest competitor is Amazon, because of the number of shoppers who frequent both retailers.

Cornell says that now more than ever, Target needs to rededicate itself to both “Expect More” and “Pay Less.”

“It’s about balance,” he said. “It’s those great home brands that you can only find at Target. Or that unique item that we only sell. Then we’ve got to make sure that when someone looks at ... the Victoria Beckham dress ... and says, ‘Hey, that dress only cost $35.’”

“But we also need to make sure we deliver great value on household essentials, because those drive the trip,” Cornell said. “It’s both the things you need and things you want.”

Cornell’s five main strategies to revitalize the retailer:

Expand the base: Target has always focused on its most loyal customers. The goal was to encourage those shoppers to buy more and buy more often.

But Cornell says the company needs to expand into cities and college campuses with smaller formats, as well as remodel its existing stores to include more visual merchandising displays.

Reclaim its merchandising powers: Rather than rely on limited-time assortments to create excitement, Cornell wants Target to deliver more new year-round brands to generate buzz and meaningful sales.

“Where I do think we fell behind” is innovation, Cornell said.

“We had to step back and make sure we were putting quality back into the product and the investments we’ve made in product design and development is fueling” the creation of several brands like Cat & Jack and Pillowfort.

Fix the supply chain: To encourage shoppers to visit Target more frequently, the company has to make sure stores don’t run out of household products.

“We’ve got to do the basics well,” Cornell said. “I will tell you we’ve made great strides there. Paper, pet supplies and food, we’re in stock much more often than we were three years ago.”

Invest cash into lowering prices: Target has always favored profit over sales. The company has been reluctant to engage its competitors in price wars to win market share.

Target won’t do big clearance sales, but Cornell said the company will sacrifice some of its treasured profit to more consistently offer lower prices on a daily basis.

Improve integration between the Web and physical stores: Target’s e-commerce sales have been one of the company’s bright spots, growing well over 20 percent on a quarterly basis. But the increases have not been enough to offset the decline in store traffic and sales.

Cornell wants to create a more consistent experience online and in stores.

“I think it’s always going to be a work in progress, but I think it’s gotten much better,” he said. “If you go to our site, versus even a year ago ... the ease, the features, the ability to search and check out, the ... improvement has just been dramatic.”

Some wonder whether Target’s overall efforts will be enough. With Amazon acquiring Whole Foods and Walmart creeping into higher-end fashion, Target may find itself squeezed on all sides, said Scott Galloway, a professor of marketing at New York University’s Stern School of Business.

“Target is caught in no-man’s land,” Galloway said. It “doesn’t have the same access to capital like Amazon and they don’t have the scale of Walmart.”

But Cornell is not panicking. Though Amazon has mastered e-commerce, it will face a significant learning curve in running a grocery chain in Whole Foods, he said.

“Amazon is going to find out pretty quickly how challenging stores are to operate,” he said. “Particularly when they’re filled with fresh foods.”

Cornell likes to think the Whole Foods acquisition validates what he has been saying all along: Physical stores still matter. And Target has 1,800 of them, in prime locations across the country.

What Target needs is some of that old magic that made it special in the first place.