Over the past year, Target Corporation has been grappling with declining sales and a shift in customer behavior, which have significantly impacted its financial performance. The downturn began in mid-2023 and has since been influenced by multiple factors, including boycotts, rising retail theft, and economic pressures.
Target Sales Decline Sparked by Boycotts
The trouble for Target began in the summer of 2023 when a massive consumer boycott emerged in response to the company’s Pride collection, which faced criticism for allegedly targeting children. The backlash led to a noticeable drop in sales and negative publicity.
Later that year, Target faced another blow when it raised concerns about increased retail theft, which forced the company to close nine stores across four states. This issue further affected customer confidence and the company’s bottom line.
Economic Pressures Add to Target’s Problem
In addition to boycotts and theft, Target has reported a decline in consumer spending at its stores. Despite implementing price cuts on thousands of items in 2023, the company has struggled to regain customer trust. Target attributed this behavior to inflation and the rising cost of living, which have forced customers to tighten their budgets.
In its fiscal third-quarter earnings report from November, Target revealed that comparable sales increased by only 0.3% year over year. Furthermore, the average money spent per transaction shrank by 2% compared to the same period in 2022. Target’s fiscal fourth-quarter results, expected around March 4, are anticipated to shed more light on the company’s financial health.
Target’s Controversial Decision to Scale Back DEI Initiatives
In an attempt to recover and refocus its strategy, Target has made a controversial move by scaling back its diversity, equity, and inclusion (DEI) programs. This shift is part of a broader trend in corporate America, as companies face scrutiny and backlash over their DEI initiatives.
Target recently informed employees through a memo that it will no longer report to the Human Rights Campaign, which tracks LGBTQ+ corporate policies. Additionally, the company is ending its three-year DEI goals and its Racial Equity Action and Change initiatives. These initiatives had previously included programs to advance Black employees’ careers, promote Black-owned businesses, and provide anti-racism training for staff.
Kiera Fernandez, Target’s Chief Community Impact and Equity Officer, addressed the decision in the memo, stating, “Many years of data, insights, listening, and learning have been shaping this next chapter in our strategy. As a retailer that serves millions of consumers every day, we understand the importance of staying in step with the evolving external landscape, now and in the future – all in service of driving Target’s growth and winning together.”
The Rise and Fall of DEI in Corporate America
Target’s decision to cut back on its DEI initiatives follows a larger trend, particularly after political and legal challenges. In January, former President Donald Trump issued an executive order dismantling federal DEI programs, calling them discriminatory. He also ordered federal DEI employees to be placed on paid leave.
Several major retailers, including Walmart, Lowe’s, and Tractor Supply, have similarly scaled back their DEI efforts amid criticism from conservative groups accusing corporations of being overly “woke.” The U.S. Supreme Court’s 2023 decision to end affirmative action in college admissions has further fueled debates over the legality of DEI programs in the workplace.
While many corporations have opted to scale back their DEI efforts, some are holding their ground. Costco shareholders recently voted against a proposal to end the company’s DEI program, and Goldman Sachs has defended its policies despite shareholder concerns. A spokesperson for Goldman Sachs emphasized that the company’s DEI policies comply with the law and contribute positively to workplace diversity.
Target’s Path Forward
As Target navigates its challenges, the company is under pressure to balance customer expectations, financial recovery, and corporate responsibility. While the decision to scale back DEI programs has garnered mixed reactions, the retailer’s future will likely depend on how it adapts to changing market conditions and consumer sentiment.
For now, Target faces a delicate task: regaining consumer trust and steering through a complex and evolving landscape.