Copyright The Street
Target was once one of the top retailers nationwide. Collaborations with major fashion brands were a big draw for many consumers. The partnerships offered customers high-quality, stylish, and on-trend products at affordable prices. This strategy boosted Target’s sales, increased foot traffic, strengthened brand recognition, and opened the doors to broader markets spanning all income levels. For younger generations, Target became a cultural touchstone, a destination not just for essentials, but for clothing, makeup, home goods, and even Starbucks beverages. However, that spotlight has faded. Today, Target faces declining sales and traffic, leading to persistent financial challenges that have tarnished its reputation. Walking through the aisles, the excitement that once defined the shopping experience is gone. In some stores, displays are messy, merchandise lacks luster, and apparel appears “too basic.” In the second quarter of fiscal 2025, Target (TGT) reported a nearly 1% decline in net sales year-over-year, with comparable sales falling almost 2%. Apparel & Accessories and Household Essentials were the two main categories that saw significant drops. Traffic has also slowed over the last few quarters, even after rolling out October promotions. Data by Placer.ai shows a 5.3% decrease in foot traffic during Target Circle Week compared to last year. Without a solution, Target risks losing the loyal customers that have been the foundation of its growth. Target’s new leadership and strategic initiatives Target’s COO, Michael Fiddelke, is addressing these challenges as he prepares to take over as CEO in February 2026, following Brian Cornell’s retirement. His strategy emphasizes returning to Target’s roots by delivering stylish, affordable products, leveraging technology, and creating a consistent customer experience. To achieve this goal, Target’s team has traveled worldwide for inspiration and is using AI-powered tools, including Target Trend Brain, to design new merchandise, according to a CNBC interview with Fiddelke. The company plans to test these efforts during the upcoming holiday season, which is Target’s busiest time of year and accounts for about one-third of its annual sales. The retailer will introduce 20,000 new items in the fourth quarter, double the previous year’s offerings, according to a press release. More Retail Industry Strategies: Walmart puts a freeze on one kind of hiring (blame the White House) Macy’s makes its biggest move yet to rival Amazon Dick’s Sporting Goods partners with Lululemon rival Despite these initiatives, Target expects overall sales to decline for the full year of 2025 as noted in its latest earnings report. Target Chief Creative Officer Rick Gomez points to the COVID-19 lockdowns as a major factor in the company’s decline. “Nobody was traveling. Nobody was out there getting inspired. Our designers were stuck at home. Our merchants were stuck at home. We weren’t seeing new fabrications, new silhouettes, new trends. We didn’t have our finger on the pulse of consumer culture, what was trending, what was happening. We lost touch,” Gomez said. He explained that this disconnect led to the overproduction of items that were “too safe” and “neutral,” which failed to resonate with shoppers, negatively affecting key seasons like back-to-college. Target makes harsh labor cuts Target recently eliminated 1,800 corporate roles, representing approximately 8% of its workforce, the largest reduction in a decade. While Target hasn’t explicitly described the cuts as a cost-saving measure, such reductions are often implemented during financial strain to redirect resources toward more profitable areas. Given the company’s declining sales and significant investment in new strategies, these cuts likely reflect broader financial challenges. Target’s historic collaborations and owned brands Target has a long history of successful brand collaborations that have driven customer engagement across various categories. Brands target has collaborated with Ulta: Shop-in-shop for premium makeup, hair, and skin care (ending August 2026) Peloton: Workout apparel and accessories, expanded in 2025. Kendra Scott: Exclusive line of affordable jewelry and fashion accessories launched in 2023. Levi’s: Limited-edition denim and apparel line, which was expanded in 2022. Lilly Pulitzer: Apparel, accessories, and home décor line launched in 2015 and reintroduced in 2019. Diane Von Furstenberg: Fashion, beauty, and home product collaboration introduced in 2024. Chip & Joanna Gaines: Hearth & Hand is an exclusive home décor brand launched in 2017 in partnership with Magnolia. In addition to collaborations, Target owns more than 40 brands generating over $30 billion annually, accounting for nearly a third of total revenue. Eleven brands exceed $1 billion in yearly sales, with four flagship brands approaching or surpassing $3 billion: Good & Gather: Food Cat & Jack: Children’s apparel Up & Up: Household essentials Threshold: Home Goods Source: Yale School of Management. “By reimagining design as a strategic approach to address a wide range of consumer and stakeholder needs, Target offers executives a powerful model for transforming apparent dilemmas into the catalysts for innovation,” said Yale Program on Stakeholder Innovation and Management Practice Leader Jon Iwata. Earlier this year, the retailer began using Target Trend Brain, an AI-powered tool to help the company’s designers and merchants forecast upcoming trends by analyzing colors, materials, and silhouettes preferred by customers. “We really realized that we needed to go deeper and go to the real source of where the trends were emerging, because culture is moving so fast,” said Target Senior VP of Product Design and Packaging Jenny Breeden. Target’s combination of historic collaborations, owned brands, AI-powered design, and strategic leadership positions it to adapt to changing market conditions. However, the company must execute these strategies carefully to regain sales momentum and restore its reputation as a leading retailer.
