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 is implemented, it sees an unexpected change in customer behavior as it works to regain its position in retail.
In February, Michael Fiddelke became Target’s new CEO. The leadership change came after the company struggled to increase sales last year amid consumer boycotts over the rollback of its diversity, equity and inclusion policies.
It also faced challenges attracting price-sensitive consumers to its stores due to economic pressures such as tariffs, inflation and a sluggish housing market.
In 2025, Target’s comparable sales declined 2.6% year over year, while its operating income declined approximately 8%, according to its fourth-quarter earnings report for 2025.
Target commits to major changes in stores to rebuild customer loyalty
Shortly after taking over as 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: “lead with marketing authority,” “improve the guest experience,” “accelerate technology,” and “strengthen our team and communities.”
“We will make clear decisions, invest where it matters most, and bring this strategy to life through our stores, our digital experiences and, most importantly, our people,” Fiddelke said in the memo.
Related: Target’s effort to end customer boycotts faces major problem
Since launching this new strategy, Target has made several major changes to stores. In March, it launched a new Baby Boutique department in hundreds of its stores, featuring 2,000 new baby items, including premium brands. It also expanded its Baby Concierge service.
Additionally, it added a gift area to the front of the department in nearly 1,000 stores. In April, Target introduced the viral clothing brand Parke to its stores, and most items are priced under $40. It also added a limited-time Pokémon collection to its shelves.
It is currently remodeling more than 130 stores, featuring expanded grocery selections, modern décor and fixtures, and self-checkout system upgrades. The renovations also include updated spaces and expanded services to support order pickup, Drive Up, exchanges and returns.
As Target’s new strategy continues to unfold, the company saw a 5.6% year-over-year comparable sales increase in the first quarter of 2026, according to its latest earnings report.
Target same-store foot traffic also increased 7.1% in February, 6.5% in March and 4.8% in April, according to recent data from Placer.ai.
During a call with reporters, Fiddelke said sales in Target’s baby category rose 5 percentage points during the quarter. Additionally, after adding approximately 1,500 new health and wellness items, Target experienced 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 Target’s performance results during the quarter were “stronger than expected.”
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“As we’ve made changes to the categories, we’re seeing guests respond well to those changes, and that’s early proof to us that we’re on the right track,” he said.
He also acknowledged that buyers continued to struggle with economic pressures in the early months of the year.
“We see a consumer that remains resilient, even though it faced a combination of headwinds and tailwinds in the first quarter,” he said.
To keep customers engaged, Fiddelke said Target is planning its “biggest food reset in more than a decade.” The company is also beginning its multi-year reinvention in the home and beauty categories.
Target now expects its net sales in 2026 to grow in the range of 4%, which is 2 percentage points higher than its previous range.
“Despite our updated guidance, we maintain a cautious outlook given the work we know we have ahead of us and the continued uncertainty in the macroeconomic environment,” Fiddelke said.
More grocery news:
Target’s sales growth comes despite falling American consumer confidence. In May, consumer confidence fell 7.7% year-over-year, according to data from the University of Michigan Consumer Sentiment Index.
“Real income expectations continued the decline that began in March,” Joanne Hsu, director of Consumer Surveys at the University of Michigan, said in a statement.
“About a third of consumers spontaneously mentioned gasoline prices and about 30% mentioned tariffs,” he continued. “On the whole, consumers continue to feel hammered by cost pressures, led by rising prices at the pump.”
As consumers become increasingly concerned about the economy, they are taking serious steps to conserve their dollars, especially when it comes to grocery purchases, according to a survey conducted last month by consumer information platform Zappi. This shift in consumer behavior poses challenges for Target and other grocery retailers.
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How Americans are changing their grocery shopping habits:
Approximately 70% of American consumers in the survey mentioned price or value as the main influence when purchasing snacks and drinks.
On 80% saw higher grocery costs in the last six months, including more than one in four observing increases of more than $50 per week.
In response to rising costs, 90% are adjusting your purchasing habits.
Also, 32% They said they would buy the least expensive item on the shelves that meets their financial needs, regardless of brand.
Besides, 46% of consumers at all income levels use coupons or promotions while shopping for food, 40% They are changing to their own brands, 38% They are buying only the essentials, and 34% are buying fewer items to offset price increases. Source: Zappi
“Consumers are under real financial pressure, and with nearly a third willing to buy the cheapest option that meets their needs, the era of growth driven by price increases is coming to an end,” Nataly Kelly, Zappi’s chief marketing officer, said in a press release.
“Overcoming data fragmentation and continually staying connected to consumers will unlock the execution challenges that stand in your way.”
Related: McDonald’s makes a big change beyond burgers
This story was originally published by TheStreet on May 20, 2026, where it first appeared in the Retail section. Add TheStreet as a preferred source by clicking here.
