Target’s incoming CEO, Michael Fiddelke, is facing a big problem before his first day on the job.
The longtime Target exec will officially take over the reins from Brian Cornell in February. The retailer has reported 11 straight quarters of flat or falling sales and has seen boycotts from both sides of the political spectrum over the past two years. Target has also struggled to stock products and maintain strong customer service in stores.
Over the past year, Target’s stock has fallen 62% while Walmart’s stock has grown 20% and Amazon’s stock is up 53%.
Analysts and retail experts told ADWEEK that the problems aren’t insurmountable—Target still has great locations and strong brand equity—but the issues go beyond the cultural flashpoints that have dominated news cycles. Marketing is part of the problem, but Target’s challenges include deep operational issues that determine how people shop.
“They’ve lost their Target-ness,” said Steve Dennis, a former retail executive and president and founder of SageBerry Consulting. “There was a clear step up from Walmart and the off-price folks—they had more service, a friendlier position, and private labels. It seems like they’ve lost that.”
During Target’s earnings call on Aug. 20, Fiddelke outlined three of his immediate priorities: Rebuilding Target’s merchandising strategy, improving the in-store experience, and investing in technology.
Stuck in the murky middle
For years, Target differentiated itself as a slightly premium retailer known for unique merchandise, including popular private labels like Cat & Jack, a line of children’s apparel, and food brand Good & Gather. The slogan “expect more, pay less” accurately articulated Target’s position, Dennis said.
“It was clear that they had a value positioning and that you’re going to get more,” he said.
But post-Covid, the retail landscape is divided between essential items and nonessential items. Walmart and Amazon have focused on essentials like grocery and basics, while retailers like T.J. Maxx and Sephora have invested heavily into nonessential products like fashion and beauty—leaving Target in the middle without a clear differentiator, said one retail advertising exec who spoke on the condition of anonymity due to relationships with retailers.
