Target’s plan to win you back

Minneapolis
 — 

The new Target CEO believes adding new, buzzy brands can win back shoppers after a brutal few years.

CEO Michael Fiddelke said Tuesday that Target will improve its products and redesign stores to draw shoppers and begin its “next chapter of growth.” Fiddelke, who took over as Target’s chief executive last month, started his career at Target as an intern in 2003 and rose up the company’s ranks.

Target will increase capital spending by 25% to $5 billion this year to bolster operations, technology and other areas of the business.

At an event for investors at Target’s Minneapolis headquarters on Tuesday, company leaders detailed their turnaround plan.

The company plans to expand into new items in food, beauty, apparel and home furnishings. These categories are critical to Target both as money makers and to help the company stand out from competitors. Target also plans to launch partnerships with different vendors.

In Target’s beauty sections, for example, the company is putting the trendy Supergoop sunscreen brand on shelves for the first time. It is also adding more sports and games merchandise for kids.

Target doesn’t just need to revamp its products on shelves. It also needs to invest in labor to stock them, retail analysts say.

Target has struggled to keep stores tidy and certain products on shelves. Customers have complained about long checkout lines and understaffed stores.

“They’re trying to do basic things like stay on trend,” said Spencer Hanus, an analyst at Wolfe Research. “It’s not rocket science, but it’s hard to do it at scale across 2,000 stores.”

Fiddelke takes over at an inflection point for Target.

The company has faced stiff competition from Walmart and Amazon, and it’s also made strategy mistakes. It scaled back Pride displays and rolled back DEI programs, angering its liberal customers.

Target’s sales have stagnated and its stock has dropped nearly 30% over the last three years.

Target also had a weak holiday. Target’s sales at stores open for at least one year dropped 2.5% during its latest quarter, the company said Tuesday.

But the company says things are starting to get better. Sales rose in February and the retailer expects total sales to grow around 2% this year.

Some investors hoped Target would choose an outsider to turn around the company, but it opted for a Target lifer.

Bill George, a fellow at Harvard Business School and former Target board member, said Fiddelke “knows the company inside and out. He knows the weaknesses and the problems.”

“I think he is the right person to rebuild Target for the long term,” George said.