It is no secret that Target (TGT) has been suffering from a fleeing customer problem amid nationwide concerns about inflation and tariffs raising prices for everyday goods.
The problem was exacerbated after the retail chain cut back its diversity, equity, and inclusion initiatives earlier this year, which sparked several consumer boycott calls.
💵💰Don't miss the move: Subscribe to TheStreet's free daily newsletter 💰💵
Despite recent efforts to lure customers back into stores, such as ramping up deals and discounts, the situation doesn’t appear to be drastically improving.
In Target’s second-quarter earnings report for 2025, it revealed that its comparable store sales decreased by almost 3.2% year-over-year. Also, recent data from Placer.ai shows that overall customer visits in Target stores decreased by 3.1% year-over-year during the quarter.
Related: Target customers may soon flee to Walmart due to alarming change
Low sales and foot traffic contributed to Target only generating an operating income of $1.3 billion during the quarter, which is 19.4% lower than what it earned during the same time period last year.
As Target struggles to win back customers, it recently announced that it will replace its CEO, Brian Cornell, with its current chief operating officer, Michael Fiddelke, in February of next year.
Target unveils drastic store changes to attract customers
During an earnings call on Aug. 20, Cornell said the company is “far from satisfied” with its recent performance.
“We need to do better, and our entire team is focused on consistent execution, building further momentum, and getting back to profitable long-term growth,” said Cornell.
Fiddelke emphasized during the call that Target’s performance has “not been acceptable,” and it needs to get back on track by making three crucial changes to its business practices.
“First, we must reestablish our merchandising authority in a way that is distinctly Target,” said Fiddelke. “Second, we’re a retailer that believes that an elevated experience is every bit as important as product. We want guests to find a sense of joy from every trip to Target, and we must do that more consistently and frequently. And third, we must more fully use technology to improve our speed, guest experience, and efficiency throughout the business.”
Related: Temu struggles to win back customers due to unexpected rival
Specifically, he said that shoppers respond “strongly” when stores offer merchandise that blends “quality, value, and style not seen anywhere else in the market.”
“To reestablish our leadership here, we need to go beyond the occasional design partnership or new product launch and ensure we’re bringing this authority across each category in our business throughout the year,” said Fiddelke. “That will require change, and that change is happening.”
He also said that the company needs to offer better customer service to gain more loyalty from shoppers.
“We can never take for granted the love our guests show us when they affectionately refer to their local store as my Target,” said Fiddelke. “That’s loyalty we need to consistently go out and earn. From well-stocked shelves and clean stores to a friendly and helpful team and an online experience that brings inspiration and discovery, we want to delight our guests who shop with us every time they shop.”
Fiddelke also highlighted that the company will make “key technology investments” in its stores, supply chain, headquarters, and digital operations.
“While we’re proud of the many ways that Target is unique in American retail, we have real work in front of us,” said Fiddelke. “And to be blunt, we need to move faster, much faster, and we are.”
Target addresses a growing concern from consumers
In addition to detailing vital changes to business operations, Target also addressed a major elephant in the room: tariffs.
Last week, Bank of America analysts released an analyst note claiming that because of Target's high import exposure, the retailer will need to hike prices at twice the rate of its top rival Walmart to weather the impact of tariffs.
More Retail:
- Target has another big problem amid alarming customer behavior
- Dollar General announces big store change to win back customers
- Amazon pulls the plug on a free service for customers
During the call, Target Chief Commercial Officer Rick Gomez said increasing prices is “the last resort,” since the company is taking several proactive steps to handle tariffs, such as negotiating with its partners.
“We feel that we are well-positioned relative to other retailers, given Target's size and scale, given the flexibility that we have with our multi-category business, and then the fact that we have a world-class global sourcing and design team puts us in a good position to navigate these tariffs,” said Gomez. “We are employing several different strategies, including diversifying country of production, in some cases, evolving our assortment.”
Price increases in Target stores can spell trouble for the company, which could further negatively impact sales.
A recent survey from market research company Numerator found that 86% of consumers are concerned about tariffs causing financial strain.
As a result, 81% of consumers are changing shopping habits in response to tariffs, including putting off nonessential or expensive purchases, buying fewer imported goods, scavenging for sales and coupons, and switching to shopping at lower-priced retailers and discount stores.
Related: Target will soon cut a major section customers love from stores
