Target Reloaded 🎯

There is a red tunnel in New York City.

Located at 600 Broadway, it is part of Target’s newly revamped SoHo store, which opened on December 9, 2025. The tunnel welcomes customers into the store, but it is more than an entrance. It does not simply lead people inside — it prepares them. 

On either side of the passage, the tunnel is lined with carefully curated merchandise: chic apparel, trend-forward handbags, thoughtfully selected scented candles, and other trendy stuff that you can find only in a Target store. Walking through it feels like stepping inside the brand itself.

The effect is intentional, bringing style and design — two things Target has increasingly leaned into for its success over the years — to the forefront before the shopping even begins.

But Target’s SoHo store did not always look like this. 

For years, it carried no apparel, positioned mainly as a quick stop for essentials — snacks, beauty products, and everyday basics. Shoppers dropped in, grabbed what they needed, and moved on.

But Target flipped the script. 

The revamped SoHo store is part of a broader strategy to reverse the retailer’s declining performance — and Target needs one. The retailer has been stuck in a different tunnel. It has reported consecutive quarters of comparable sales declines, and its shares have fallen roughly 60% from their 2021 peak.

In this issue of CrossDock, we explore Target's turnaround strategy — from appointing a new CEO, and reworking its fulfillment model, to trying to reclaim its reputation as a style destination. We unpack the retailer's latest moves to regain its footing in American retail, with perspectives from the company's leadership.

But before we get to the turnaround plan, we need to understand the events that led to this moment. Let's travel back nearly a decade to 2014, when Target faced a similar situation and hired a new CEO to fix it.

It was December 2013, and retailers across America were deep into their busiest season of the year. Holiday shopping was in full swing — the make-or-break period that can define a retailer's fortune for the entire year. And Target was no exception. With stores packed and foot traffic increasing, the retailer was hoping for a good run. 

But unnoticed, something had gone terribly wrong.

In late November, hackers had quietly infiltrated Target's network through a third-party vendor. For weeks, they lurked undetected, installing malware on the company's point-of-sale systems. Then, between November 27 and December 15 — right in the middle of the holiday rush — they struck. 

The data breach was massive, and the largest Target had ever faced. The company first disclosed that 40 million credit and debit card accounts had been compromised. Weeks later, in January, Target’s press release revealed the breach was even worse: as many as 70 million people may have had personal information stolen — names, addresses, phone numbers, and email addresses. 

The impact was immediate. By February, in its Q4 2013 earnings report, the retailer reported that profits had nearly halved from a year earlier to $520 million, and revenue had fallen nearly 6% to $20.9 billion. The company said the hack had cost it $61 million — costs to contain the breach, credit monitoring, legal services, fraud losses, and card replacements.

It was not just sales that Target lost. Customer trust was also in shambles. Only 33% of U.S. households shopped at Target in January 2014 — a 22% drop from the same time the previous year, according to a survey by Kantar Retail. Customer traffic had hit its lowest point in three years. 

Five months after the data breach, then-CEO Gregg Steinhafel, a 35-year Target veteran, resigned. 

But the data breach was not Target's only problem. 

While the company was still reeling from the hack, another crisis was unfolding north of the border. Target had rushed into Canada in 2013, opening 133 stores in just over a year. The expansion was a disaster from the start — poor real estate decisions, supply chain failures, inventory issues, and prices higher than customers expected.

To resolve its issues, Target needed both new plans and fresh thinking. So in August 2014, the company did something it had never done before: it hired an outsider.

Brian Cornell became Target's first CEO from outside the company's ranks. He brought experience from PepsiCo, where he led international businesses, and Sam's Club, where he served as CEO.

It was a necessary move to stop the bleeding.

Interestingly, cutting losses was only one part of the strategy. The other half was aggressive reinvestment.

In 2017, Cornell announced a massive $7 billion, three-year investment plan to fundamentally transform Target. The money would flow into three critical areas.

First, reimagining the digital infrastructure. Target built out same-day delivery, curbside pickup, and in-store fulfillment capabilities to compete with Amazon and Walmart. The company had a crucial advantage: nearly three-fourths of Americans lived within 10 miles of a Target store, thanks to its 2,000+ locations nationwide. 

Target leveraged this proximity, transforming stores into mini-fulfillment centers that could deliver online orders faster and cheaper than standalone warehouses.

Add to this the strategic acquisition of Shipt for $550 million in 2017 — one of the largest acquisitions in Target's history — which brought same-day delivery to half of Target's stores by early 2018.

Next came the physical stores. Cornell announced plans to remodel 1,000 stores by the end of 2020. The overhauls featured new lighting, updated décor, redesigned merchandise displays, and optimized layouts for a seamless shopping experience. 

Finally, the expansion of private-label brands. Target launched more than a dozen exclusive brands across apparel, home goods, and groceries. These brands offered better margins and gave customers products they couldn't find anywhere else. 

Thanks to Cornell's stores-as-hubs model, Target had cracked the secret sauce of retail: it built a powerful online business while simultaneously drawing customers into its physical stores. 

The stores became dual-purpose assets — mini-warehouses shipping products to digital customers, and destinations for in-person shoppers seeking trendy brands at affordable prices. The billions in investments also soon paid off. 

According to the company's 2018 earnings report, Target posted its strongest comparable sales growth since 2005.

But Target’s true purple patch came during the pandemic. 

During the pandemic, shoppers flocked to Target for one-stop shopping, buying essentials, groceries, and home office equipment in a single trip. Home goods became a breakout category as stuck-at-home Americans redirected discretionary spending toward improving their living spaces.

In 2020, Target's full-year sales grew by more than $15 billion — greater than the retailer's total sales growth over the previous 11 years combined. Comparable sales jumped 19.3%, while digital sales surged 145%. And in 2021, Target crossed the $100 billion mark in annual revenue. 

Target had everything in the world: shoppers who adored them, sales that were skyrocketing, and a market share that climbed year after year. 

But it all came crashing down. In fact, the very strengths that powered Target’s pandemic surge would later become its greatest vulnerability.

When the pandemic finally ended, and the virus had faded, the world was a different place. People who had spent merrily on discretionary items — furniture, décor, trendy apparel — held back. The living room makeovers stopped. The impulse purchases dried up. Americans were still shopping, but not as much as before.

Add to this the inflation. Inflation soared, reaching 8% in 2022.

And the biggest impact of this fell on Target. That’s because Target had built its business on discretionary spending; when consumers tightened their wallets, Target was immediately affected. 

The immediate problem was excess inventory. Target had bet big on continued demand. During the pandemic, supply chains were snarled, so the retailer had ordered aggressively to avoid empty shelves. That bet had backfired, and Target was drowning in inventory. According to reports, the retailer was sitting on $15.3 billion in merchandise, 36% higher than the previous year. Billions in furniture, apparel, and home décor sat untouched. Target had to slash prices to clear the excess inventory. 

The financial damage of all this was brutal. 

According to Target's Q2 2022 earnings report, operating income dropped 87% in the second quarter — falling from $2.5 billion in 2021 to just $321 million. Net earnings plunged 90%, from $1.8 billion to $183 million. For the first half of 2022, operating income had already declined 66%. 

It was not just the earnings that were affected; customers also complained about the experience. 

For years, shopping at Target wasn't a chore — it was an experience people loved. Shoppers made leisurely trips to browse curated home décor, discover trendy apparel, and pick up everyday essentials, all in a clean, well-designed environment. People playfully called it "Tarzhay" to reflect its affordable yet stylish appeal.

But soon, social media was filled with unhappy customers. Shoppers complained about messy aisles, disorganized merchandise, longer checkout lines, empty shelves, and declining staff engagement.  

The culprit, in part, was Target's own success. The stores-as-hubs model that had turbocharged digital growth was now strangling the in-store experience, according to experts. 

By 2025, stores were fulfilling more than 95% of Target's online orders—nearly 2,000 locations had effectively become mini-warehouses. Store employees were stretched impossibly thin, trying to serve in-person customers while simultaneously picking, packing, and shipping online orders. This added operational complexity and affected employee morale. 

Then came the locked cases. A rise in retail theft — Target reported over $400 million in losses in 2022 — forced the company to lock everyday essentials behind glass. This further deteriorated the customer experience. 

Target's problems were not just declining sales and poor execution — the retailer was also caught in boycott calls from opposite ends of the political spectrum. Conservative activists attacked its 2023 Pride merchandise and called for a boycott, and then in January 2025, Target quietly rolled back key diversity, equity, and inclusion (DEI) initiatives.

All this damage was visible in foot traffic data — fewer people were coming through Target's doors.

According to Placer.ai, Target lost foot traffic in 10 out of 12 months in 2025, with February posting the worst decline at 9.2% year-over-year, followed by September's 5.1% drop. Meanwhile, competitors like Walmart gained visitors, particularly among higher-income households earning over $100,000, an income group that historically preferred Target over Walmart.

By August 2025, the damage was staggering: Target's market capitalization had fallen to $45.33 billion — down from $129 billion in 2021. 

For Target, this crisis is almost familiar. Just as in 2014, Target’s brand image was facing a crisis, its strategy was in desperate need of reinvention, and it needed fresh leadership.

But this time, the company made a different bet. Instead of hiring an outsider, it turned inward and promoted a homegrown leader.

Michael Fiddelke is what experts would call the quintessential company insider, molded by Target over more than two decades. He joined the company in 2003 as an intern, and over the next two decades, Fiddelke moved across nearly every critical function of the business. On August 19, 2025, Target's board unanimously appointed him CEO, effective February 1, 2026.

In an official statement announcing his appointment, Christine Leahy, the lead independent director of Target's Board of Directors, stated, "It is clear that Michael is the right leader to return Target to growth, refocus and accelerate the company's strategy, and reestablish Target's position as a leader in the highly dynamic and fast-moving retail environment."

Fiddelke didn't sugarcoat the challenge ahead. In Target's Q2 2025 earnings call, he acknowledged, "I know we're not realizing our full potential right now, and so, I'm stepping into the role with a clear and urgent commitment to build new momentum in the business and get back to profitable growth."

During the call, Fiddelke laid out three priorities to drive growth and reinforce Target's core identity. They were: reestablishing merchandising authority, elevating the store experience, and fully embracing technology to improve speed, efficiency, and the guest experience.

And these aren't just talking points. Target has already begun executing on them. Let's break them down for you. 

Target is starting its turnaround by rethinking the very strategy that once saved it: the stores-as-hubs model.

For years, Target used nearly all of its 2,000 stores as mini-fulfillment centers, with each location handling online orders alongside serving in-person shoppers. But as digital demand exploded, that approach created the operational chaos that drove customers away. Now, Target is taking a different approach: not every store will do everything.

In an interview with CrossDock Insights, Daryl Glass, Senior Vice President of Fulfillment and Last Mile at Target, explained the shift: "We've evolved stores-as-hubs from a broad capacity solution into a more precise, market-based model that better aligns local supply and demand within a given market. As digital demand has grown, we've learned that scale doesn't come from asking every store to do everything – each should focus on different things based on their different sizes and locations."

The change is significant. Some high-traffic stores will shed fulfillment responsibilities entirely, allowing staff to focus on the in-store experience. Other locations – typically larger stores with more backroom space – will take on heavier shipping volumes. And in some markets, Target is moving digital orders out of stores altogether and into dedicated fulfillment centers.

"For some stores, this will mean taking on more shipping volume. For other stores, it will mean less or none. And when it makes sense, we'll move volume out of stores and into nearby fulfillment centers," Glass told CrossDock Insights.

But how does Target decide which stores are "built to fulfill"?

The company tracks success across multiple metrics, Glass said: "Zooming out, we evaluate the impact of this strategy via: Digital guest experience metrics like promise speed and delivery outcomes; top- and bottom-line metrics like ship-to-home conversion, sales, and cost of fulfillment; and in-store ripple effects in locations where shipping volume is reduced, such as improved in-stocks and team member availability.

The most visible test of this approach is already underway in Chicago. Let’s first break down why Chicago? According to Target, Chicago is a market with high guest density and all the assets needed to pressure-test the strategy — dozens of stores, two fulfillment centers, and two sortation centers.

This is how it unfolded: Target concentrated shipping volume into six high-capacity stores, pulled fulfillment responsibilities out of 18 locations entirely, and shifted more volume to dedicated fulfillment centers.

And the results were immediate. According to Target, shipping became almost a full day faster, and next-day delivery became available to five times as much of the local demand. The speed improvement drove incremental sales gains that showed up right away — particularly in categories like baby products and household cleaning.

The cost impact and shoppers' in-store experience are also worth noting. "In Chicago, as we sped up shipping, it also became our least expensive shipping market, with the lowest last-mile delivery cost in the network," said Glass.

"And in stores that reduced or eliminated shipping, team members were able to focus more on serving guests – improving in-stocks and speeding up Order Pick Up and Drive Up," said Glass. "Ultimately, this is about getting faster across all the ways guests want to get products from us – today, tomorrow, or in two days – while protecting the store experience," he added.

The Chicago results gave Target the confidence to scale. Within months, the company began rolling out the same playbook across dozens of other metro areas.

But fulfillment is a cutthroat game in U.S. retail, with Amazon and Walmart splurging on capital and technology to build ever-faster delivery networks. Amazon has built a proprietary logistics system that rivals UPS and FedEx. Walmart is turning 4,700 stores into fulfillment nodes while investing billions in automation.

So how does Target's new fulfillment strategy position it against these capital-intensive competitors?

In Cleveland, Target is testing a different variation of its fulfillment approach through its Euclid last-mile fulfillment center – a 40,000-square-foot facility operated in partnership with Ryder. According to reports, it is the only Target site in Northeast Ohio dedicated solely to last-mile delivery.

This is how it works: Cleveland stores pick and pack online orders, then send them to Euclid for sortation. Shipt drivers pick up zone-sorted packages from the facility and deliver them to customers within the neighbourhood. The facility will rely exclusively on Target's Shipt drivers for deliveries.

For Target, fixing fulfillment solves half the problem. The other half is getting customers excited about Target's products, again.

Bringing back the Tar-zhay experience is one of the foremost goals. CEO Michael Fiddelke made that clear on the company's August 2025 earnings call, saying Target had to "reestablish" its merchandising presence through unique products across categories such as apparel, home, and food and beverage. He pointed to Target's $31 billion private label portfolio as a way to bring newness to store shelves. "We need to reclaim that merchandising authority," Fiddelke said.

And as we mentioned earlier, Target’s SoHo store is the biggest example, an experiential store led with style. The store features curated, rotating collections chosen by celebrities and influencers, with the entire layout designed to evolve monthly rather than follow standard retail categories. Target built it in under four months as a testing ground for what "merchandising authority" looks like in physical retail. 

"To see this Target SoHo store is a punctuation point on that style of design and cultural leadership," Fiddelke said during the store's opening in December.

Behind the scenes, Target is executing a multiyear merchandise revamp across gaming, sports, toys, and home categories. The company is aggressively expanding its beauty business and pushing its private-label brands — one of the latest examples came in January 2026, when Target announced a 30% expansion of its wellness assortment, with thousands of new items and exclusive brand partnerships. 

But style and newness alone won't win back customers — Target also needs to maintain its affordability. And Target is mindful of that. Case in point: in its Q3 2025 earnings call, the company announced it had slashed prices on 3,000 everyday items, including food and household staples, and introduced a cheaper Thanksgiving meal kit to appeal to cost-conscious shoppers.

Target isn't just fixing things internally — it's forging partnerships outside to stay relevant in the age of AI and shifting consumer expectations.

Two months later, Target went bigger. In January 2026, the company partnered with Google to bring shopping directly into Gemini and AI Mode in Google Search. But this wasn't just another integration — Target co-developed the Universal Commerce Protocol (UCP) with Google and other major retailers, creating a technical standard that allows AI assistants to communicate directly with Target's product catalog and checkout systems

The partnership strategy extends beyond digital. In February 2025, Target announced a collaboration with Warby Parker to bring designer eyewear into Target stores through shop-in-shops

Target's turnaround comes at an interesting time. While Target is trying to fix operational chaos and reclaim merchandising authority, its two biggest competitors are playing offense from positions of strength.

Walmart is undergoing its own leadership transition, but the circumstances couldn't be more different. Doug McMillon, who retires at the end of January 2026, is handing over a company he transformed into what Walmart calls a "people-led, tech-powered omnichannel retailer". Under his watch, Walmart expanded same-day delivery to 93% of U.S. households and pushed digital sales penetration to 18%. 

And then there's Amazon. The e-commerce giant is making another bet on physical retail — this time with a 229,000-square-foot big-box store in Orland Park, a Chicago suburb. To put that in perspective: the space is large enough to fit nearly two average-sized Target stores inside. The location will sell groceries, household items, and general merchandise, with an integrated warehouse for on-site fulfillment. It's positioned near existing Target, Costco, and Trader Joe's locations. 

Target's answer to both critics and admirers is perhaps best summed up by a signboard at the entrance of its new SoHo store that reads: “We have a new look! There's more where that came from.”

This newsletter was written by Shyam Gowtham