New York
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Target’s business is in a slump, competition is bearing down and its hometown of Minneapolis is in crisis from massive federal immigration operations.
It’s a fraught moment for a new CEO to start.
Michael Fiddelke officially took over as Target’s chief executive Sunday. Fiddelke started his career at Target as an intern in 2003 and rose up the company’s ranks.
“We have real work to do,” he said in a public letter Monday. “We are equally clear on the opportunity in front of us.”
Fiddelke will aim to recapture the company’s “Tarzhay” reputation for trendy fashion and home furnishings at affordable prices.
Target for years stocked shelves with popular designer brands and its own labels such as Threshold, All in Motion and Cat & Jack. The mass merchant appealed to many consumers, but middle-income moms shopping for younger children formed a key customer base.
Target’s sales boomed during the pandemic, when customers rushed to buy essentials, home goods and other products. But it’s fallen since then.
Decades-high inflation squeezed customers’ budgets in 2022 and 2023, forcing them to cut back on discretionary purchases. Target got stuck with a glut of unsold pillows and laptops.
Target also struggled to keep stores tidy and certain products in stock on shelves. Customers complained about long checkout lines and understaffed stores. Target was even late to get some stores ready for key holidays last year.
Meanwhile, competition from Amazon, Walmart and Costco has intensified. These companies are larger than Target and have used their size advantage to drive down prices and attract customers.
Target’s sales have stagnated and its stock has dropped nearly 30% over the last three years.
“It’s an enormous job. There’s a lot to fix there,” said Scott Mushkin, a retail analyst at R5 Capital.
Fiddelke also has to navigate a tense political situation in Minneapolis.
Target and other big Minnesota companies have faced pressure to respond to the Trump administration’s immigration crackdown in Minneapolis and the killing of two American citizens by federal agents there over the last month.
Target has more than 50 stores in the Twin Cities. Protesters have gathered at many of its stores in the region to call on Target to repudiate the administration’s immigration operations, following the arrest of two Target employees at a store in Richfield, Minnesota.
Protestors rallied again outside Target’s headquarters on Monday, Fiddelke’s first day in the office, urging the company to call for ICE to leave Minnesota.
This is tricky territory for Target, which staked out strong positions in support of racial diversity and LGBTQ rights under previous CEO Brian Cornell. Those stances drew backlash from conservative customers, and progressive customers grew frustrated at Target when it stepped back from them.
Following the killing of Alex Pretti on January 24, Target joined dozens of other companies in Minnesota to issue a statement calling for the “immediate de-escalation of tensions” and for “state, local and federal officials to work together to find real solutions.”
Fiddelke also acknowledged the “incredibly painful” violence in Minneapolis in a separate video message to employees. He offered resources and support to staff members shaken by the killings.
Fiddelke’s turnaround plans will focus on trying to introduce new brands and spruce up stores.
Target is increasing capital spending by 25% to $5 billion to improve store operations, merchandise and technology.
Target also recently opened a store in SoHo, the glitzy New York City neighborhood, full of stylish apparel, designer collaborations and beauty products. Target will use the store to test new concepts it may roll out nationally.
Shoppers want “great design, real value and experiences that delight,” Fiddelke said in his letter Monday. “That’s where Target has always been at its best, and it’s what grounds the important work in front of us.”
