Under its new CEO, Target has made major changes to its stores in recent months to reconnect with customers after years of declining sales. As the company’s new strategy is launched, it is seeing an unexpected change in customer behavior as it works to regain its foothold in retail.
In February, Michael Fiddelke became Target’s new CEO. The leadership change comes after the company struggled to grow its sales last year amid a consumer boycott over backtracking policies on diversity, equity, and inclusion.
It also faced challenges in attracting price-sensitive shoppers to its stores due to economic pressures such as inflation, inflation, and a sluggish housing market.
In 2025, Target’s comparable sales fell 2.6% year-over-year, while operating income fell nearly 8%, according to its fourth-quarter 2025 earnings report.
Point bets on major store changes to rebuild customer loyalty
Shortly after taking over as CEO, Fiddelke sent a memo to employees, saying Target had “real work to do” to reengage customers.
He divided this work into four main steps: “leading with sales authority,” “elevating the guest experience,” “accelerating technology,” and “strengthening 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 experience, and — most importantly — our people,” Fiddelke said in the memo.
Related: Target’s push to end customer boycotts hits a snag
Since the launch of this new strategy, Target has made several significant changes to the store. In March, it launched a new Baby Boutique department in hundreds of its stores, with 2,000 new baby items, including premium brands. It has also expanded its Baby Concierge service.
Additionally, it added a front-door gift area to nearly 1,000 stores. In April, Target introduced the viral Parke clothing line to its stores, with many items priced under $40. It also added a limited-time Pokémon collection to its shelves.
Currently, it is remodeling 130-plus stores, including an expanded grocery selection, modern decor, and self-shopping updates. Remodeling includes updated spaces and expanded services to support order pickup, Drive Up, exchange, and returns.
A change in target draws an unexpected reaction from consumers
As Target’s new strategy continues to evolve, the company saw comparable sales rise 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 7.1% in February, 6.5% in March, and 4.8% in April, according to the latest data from Placer.ai.
During a press conference with reporters, Fiddelke said Target’s children’s sales were up 5 percent during the quarter. And, after adding about 1,500 new health and wellness items, Target saw double-digit sales growth in the category.
Sales in its toy division also grew by double digits after Target expanded its toy assortment to include more items under $10 during the quarter.
Fiddelke said Target’s operating results during the quarter were “stronger than expected.”
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“Since we have made changes in the sectors, we see that the guests respond well to those changes, so that is the first evidence for us that we are on the right track,” he said.
He also acknowledged that consumers continued to struggle with economic pressures in the first few months of the year.
“We see the consumer continuing to recover, even though he faced a mix of winds and headwinds in the first quarter,” he said.
To keep customers busy, Fiddelke said Target is planning “the biggest grocery reset in more than a decade.” The company is also starting to reinvent itself over the years in the home and beauty categories.
Target now expects its total sales in 2026 to grow in the 4% range, which is 2 percentage points higher than its previous range.
“In addition to our upgraded guidance, we remain cautious given the task we know ahead of us and the continued uncertainty in the macroeconomic environment,” Fiddelke said.
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Target’s sales growth comes despite declining US consumer sentiment. In May, consumer sentiment fell 7.7% year over year, according to data from the University of Michigan Consumer Sentiment Index.
“Real money expectations continued the decline that began in March,” University of Michigan Surveys of Consumers Director Joanne Hsu said in a statement.
“About one-third of consumers just mentioned fuel prices and about 30% mentioned prices,” he continued. “Taken together, consumers continue to feel pressured by costs, led by rising pump prices.”
As consumers grow increasingly concerned about the economy, they are taking drastic measures to hold on to their dollars, especially when it comes to grocery shopping, according to research from consumer insights platform Zappi last month. This shift in consumer behavior presents challenges for Target and other grocers.
Related: 4 modern boycotts of big brands: Did it work?
How Americans are changing grocery shopping habits:
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Almost 70% of US consumers in a survey listed or price or value as a top influence when buying snacks and drinks.
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It’s over 80% he saw high food costs the last six months, inclusive one out of four to see an increase beyond that $50 per week.
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Due to rising costs, 90% there is to fix their buying habits.
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And, 32% they said they would buy the cheapest item off the shelves that met their financial needs, regardless of the brand.
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In addition, 46% of consumers at all levels of disposable income coupons or promotionsas they buy food, 40% switch to store brands, 38% they buy only the essentials, too 34% there is to buy a few things to reduce inflation.
Source: Zappi
“Consumers are under real financial pressure, and almost one-third are willing to buy a cheaper option that meets their needs, the growth period driven by price increases is coming to an end,” said Nataly Kelly, Zappi’s chief marketing officer, in a press release.
“Overcoming data fragmentation and staying continuously connected to consumers will unlock the manufacturing challenges that stand in their way.”
Related: McDonald’s is making a big change beyond burgers
This story was originally published by TheStreet on May 20, 2026, where it appeared first in the Marketing section. Add TheStreet as a favorite source by clicking here.
