Under its new CEO, Target has been making major changes to its stores in recent months to reconnect with customers after years of declining sales. As the company’s new strategy rolls out, it is seeing an unexpected shift in customer behavior as it works to regain its footing in retail.
In February, Michael Fiddelke became Target’s new CEO. The leadership change came after the company struggled to boost its sales last year amid consumer boycotts over its rollback of diversity, equity, and inclusion policies.
It also faced challenges in attracting price-sensitive consumers into its stores due to economic pressures such as tariffs, inflation, and a slow housing market.
In 2025, Target’s comparable sales decreased by 2.6% year over year, while its operating income declined by roughly 8%, according to its fourth-quarter earnings report for 2025.
Target bets on major store changes to rebuild customer loyalty
Shortly after stepping into the role of CEO, Fiddelke sent a memo to employees, stating that Target has “real work to do” to re-engage customers.
He broke this task down into four main steps: “leading with merchandising authority,” “elevating the guest experience,” “accelerating technology,” and “strengthening our team and communities.”
“We will make clear choices, invest where it matters most and bring this strategy to life through our stores, our digital experiences, and — most importantly — our people,” said Fiddelke in the memo.
Since launching this new strategy, Target has made several significant in-store changes. In March, it launched a new Baby Boutique department in hundreds of its stores, which features 2,000 new baby items, including premium brands. It also expanded its Baby Concierge service.
Additionally, it added a front-of-department gifting area in almost 1,000 stores. In April, Target introduced viral apparel brand Parke to its stores, with most items priced under $40. It also added a limited-time Pokémon collection to its shelves.
Currently, it is remodeling 130-plus stores, featuring expanded grocery selections, modern décor and fixtures, and updates to self-checkout. Remodels also include updated spaces and expanded services to support order pickup, Drive Up, exchanges, and returns.
Robert V Schwemmer/Shutterstock.com
Target’s turnaround push draws unexpected reaction from shoppers
As Target’s new strategy continues to unfold, the company saw comparable sales increase 5.6% year over year in the first quarter of 2026, according to its latest earnings report.
Foot traffic in Target’s same-store locations also increased by 7.1% in February, 6.5% in March, and 4.8% in April, according to recent Placer.ai data.
During a media call with reporters, Fiddelke said sales in Target’s baby category increased by 5 percentage points during the quarter. Also, after adding roughly 1500 new health and wellness items, Target saw double-digit sales growth in this category.
Sales in its toy section also grew by double digits after Target increased its toy assortment to contain more items under $10 during the quarter.
Fiddelke said that Target’s performance results during the quarter were “stronger than expected.”
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“As we’ve made changes in categories, we see the guests respond well to those changes, and so that’s early evidence to us that we’re on the right path,” he said.
He also acknowledged that shoppers continued to battle economic pressures in the first few months of the year.
“We see a consumer that continues to be resilient, even though they faced a mix of headwinds and tailwinds in the first quarter,” he said.
To keep customers engaged, Fiddelke said Target is planning its “largest reset in food in over a decade.” The company is also beginning its multiyear reinvention in home and beauty categories.
Target now expects its net sales in 2026 to grow in the 4% range, which is 2 percentage points higher than its prior range.
“Despite our updated guidance, we’re maintaining a cautious outlook given the work we know we have in front of us and ongoing uncertainty in the macroeconomic environment,” said Fiddelke.
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Target’s sales growth comes despite declining U.S. consumer sentiment. In May, consumer sentiment fell 7.7% year over year, according to University of Michigan Consumer Sentiment Index data.
“Real income expectations continued a decline that began in March,” said University of Michigan Surveys of Consumers Director Joanne Hsu in a statement.
“About one-third of consumers spontaneously mentioned gasoline prices and about 30% mentioned tariffs,” she continued. “Taken together, consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump.”
As consumers grow increasingly concerned about the economy, they are taking serious measures to hold onto their dollars, especially when it comes to grocery shopping, according to a survey from consumer insights platform Zappi last month. This shift in consumer behavior poses challenges for Target and other grocery retailers.
How Americans are changing grocery shopping habits:
- Approximately 70% of U.S. consumers in the survey listed either price or value as the top influence when shopping for snacks and beverages.
- Over 80% saw higher grocery costs in the last six months, including more than one in four seeing increases of more than $50 per week.
- In response to rising costs, 90% are adjusting their shopping habits.
- Also, 32% said they would buy the least expensive item on shelves that meets their financial needs, regardless of brand.
- Additionally, 46% of consumers across all income levels are using coupons or promotions as they shop for groceries, 40% are switching to store brands, 38% are buying only essentials, and 34% are purchasing fewer items to offset price hikes.
Source: Zappi
“Consumers are under real financial pressure, and with nearly one-third willing to buy the cheapest option that meets their needs, the era of growth driven by price increases is coming to an end,” said Nataly Kelly, Zappi chief marketing officer, in a press release.
“Overcoming data fragmentation and staying continuously connected to consumers will unblock the execution challenges standing in their way.”
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