How Target lost its nerve — and then lost its business

In May 2023, I received a surprise phone call from a top Target executive. It was after the close of business, so I knew it was serious.

“I wanted to give you a heads up,” the executive said. “Tomorrow, we will be announcing that we will be pulling from Target stores some items from our annual LGBTQ+ Pride collection.”

Target, the official said, had been receiving threats from people who objected to the merchandise. Right-wing groups especially objected to apparel made by UK-based artist Abprallen, whom they accused of promoting Satanism. The products in question: outer-space-themed messenger bags and a sweatshirt reading “cure transphobia.”

For the second time in two weeks, Target panicked about a supposed security issue.

Just a few days prior, CEO Brian Cornell unexpectedly warned that rampant shoplifting could force Target to close stores. In effect, Cornell endorsed a right-wing narrative gaining traction at the time, that liberal mayors in pandemic-scarred cities were allowing crime to run unchecked. And now businesses were suffering the consequences.

“Safety of our guests and employees are our top priorities,” he said. “We will do everything in our power to keep our stores open.”

But pulling the Pride merchandise felt more consequential. The retailer was a long-time ally of the LGBTQ+ community. And destocking socially-conscious products at the last minute from nearly 2,000 stores across the country attracts attention.

Unfortunately, Target’s cold feet was not an anomaly. It was an early sign that, under pressure, Target was beginning to respond to instability by amplifying it rather than by reinforcing its own identity.

Amid President Trump’s attacks on wokeness, the company last year quickly pulled back its diversity, equity, and inclusion initiatives, many of which Target instituted after the fatal police shooting of George Floyd in 2020.

Earlier this year, Target failed to say anything during Operation Metro Surge, even after Immigration and Customs Enforcement officers arrested two of its employees in a Richfield store. Only after a Border Patrol agent killed Alex Pretti in January did the company eventually sign on to a milquetoast letter issued by the Minnesota Chamber of Commerce.

Target did not respond to a request for comment for this story.

How did Target, whose business model has long depended on the very progressive business values that it has now repudiated, crack so easily under pressure?

The deeper problem was not politics, crime, or even Donald Trump.

Target simply lost its nerve.

Pressured by a cascade of events — the pandemic, social unrest, inflation, and hyper-partisanship — the company began chasing stability instead of protecting continuity — the cultural identity that made the company successful in the first place.

Target is what industry folks call an “aspirational” retailer. The company pioneered the idea of “cheap chic,” that people with modest means could still buy fashionable merchandise, whether clothes or home accessories, created by talented, top tier designers. Its shoppers perhaps can’t afford Louis Vuitton handbags, but they can aspire to a higher-end lifestyle by purchasing cheaper stuff made by Jason Wu or Michael Graves.

But aspiration is fragile. It depends on a baseline level of stability and optimism — the sense that life is improving, not unraveling. Warning your customers that shoplifting gangs and gay-hating extremists are overrunning your stores probably doesn’t help. Neither does backtracking on inclusive values that have generated billions of dollars in profits in the past. In that sense, Target’s efforts to project control only weakened the conditions that made its brand work.

“There were a lot of self-inflicted wounds, which stemmed from lack of consistency and clarity and coming off as being very wishy-washy on some of its core values that turned out to really matter to their employees and shoppers,” said Carol Spieckerman, president of Spieckerman Retail consulting firm. “They went on a defensive position. And defensiveness is antithetical to aspiration.”

Walmart, on the other hand, is the model for peak stability. Its simple but effective “Every Day Low Prices” plays well whether the world is sunny or coming apart. We may have civil unrest and even war, but you could still count on Walmart to sell the lowest-price stuff.

Of course, neither Target nor Walmart can control such external events. But companies can certainly control how they respond to them. And what makes Target stand out is how, in its quest for stability, the company so completely and decisively retreated from its own history.

Daytons choose growth

In a way, Target was specifically created to avoid stability.

The five grandsons of Dayton’s department store founder George Dayton — Ken, Wally, Donald, Bruce and Douglas Dayton — wanted to create something of their own rather than rely on an inheritance.

They didn’t want to fight over who ran Dayton’s. Growth and profits, not stability, were key to establishing familial peace. So, they founded Target in 1962.

“Though they managed well together, one department store was not big enough for five of them,” Bruce Dayton wrote in his corporate history of Target. “For both financial and take-charge reasons, they wanted to make a bigger pie, perhaps several pies. Working together on a broader, deeper playing field, they could make the most of the opportunity their father had provided.”

“Next, the brothers decided, they were paying too high a price for harmony, for not rocking the boat,” Dayton continued. “They decided that profit, not harmony, would be the goal. Profit would produce family harmony in the long run; conversely, a lack of profit would produce disharmony among the families.”

I first encountered this philosophy while researching my book “Rebuilding Empires,” which examined how companies like Target and Best Buy adapted to disruption.

Target’s decision to meld the sensibility of a department store — which usually attracts higher-end middle-class shoppers — with a discount format was a unique and winning formula.

Its stores were known for being bright, neat and clean, a stark contrast with the messy and cluttered shelves of discounters and even some department stores.

In 1999, Target upped the ante by introducing a limited-edition collection of home furnishings by designer Michael Graves. This launched Target’s now-trademark strategy of collaborating with designers like Missoni, Lilly Pulitzer, Isaac Mizrahi, Phillip Lim, Proenza Schouler, Rodarte, Anna Sui and Jason Wu.

Target became not just a place that sold goods but a cultural authority on its own. The discounter opened pop-up stores at New York’s Fashion Week and produced music videos that aired during the Grammy Awards. Target evolved into a brand itself.

But being a forward-looking curator of taste requires confidence. It also requires a kind of inclusive progressivism that Target had enthusiastically embraced, if not in name but in practice.

“Target started a really strong multicultural strategy that lasted until COVID started,” said DeAnn Campbell, a consultant with Rethink Retail. “And it was kind of an industry-leading template where they made a deliberate sustained investment in multicultural marketing and not just talking the talk but walking the talk.”

But Target’s confidence and progressivism started to waver during the COVID pandemic. That erosion of confidence would prove central to the company’s larger break from continuity.

COVID problems

Target has weathered crises before. In 2011, its website spectacularly crashed during the rollout of its Missoni collection. The retailer’s high-profile collaboration with Neiman Marcus fell flat. And in 2015, Target pulled out of Canada, the first time it tried to expand into another country; the debacle ultimately cost it more than $2 billion.

But in each case, it was the result of Target not executing on its own plan.

COVID and the political divisions that accompanied the pandemic were not of Target’s doing, instead reflecting economic and cultural disorder. And to function, an aspirational retailer like Target needs a sense of cultural optimism.The company excels when times are good. Not so much when the country is angry and divided.

“Target is at its best is when they have a clean sense of who they are and what they want to deliver,” Alicia Hare, a former top Target strategy executive, told me. “When companies are disrupted like Target, the No. 1 emotion is fear. Fear creates a lot of different behaviors. If you don’t have the sense of purpose, there is no focus. It’s hard to decide whether we should go left or right.”

Target’s retreat began in the early part of 2023. At the time, retailers were struggling to get people back into stores after the pandemic officially ended.

Downtown areas were particularly hard hit as employees either continued to work remotely or visited the office two or three times a week. Shoplifting also prompted chains like Target, Walgreens and CVS to start placing everyday items like shampoo, toothpaste and deodorant behind locked cases.

At the same time, inflation soared, as manufacturers struggled to ramp up supply chains hit hard by the pandemic. These conditions exposed and exacerbated Target’s historic weakness: inventory control.

Target tends to order fewer products than other mass merchandisers for a couple of reasons. Like Apple, the company focuses more on profits versus raw sales growth. Carrying more inventory runs the risk that the retailer might have to cut prices to move unsold merchandise, which destroys profit margins.

Target also likes to keep its stores neat, sparse and clean, which means it greatly dislikes cluttered, messy shelves. As a result, the retailer has an unfortunate reputation for running out of merchandise, even everyday grocery items like milk and bread.

By the time Brian Cornell started to complain about shoplifting that May, the company’s sales at stores open for at least a year (same store sales) — a key metric for retailers — were anemic.

Amid rising prices, consumers tend to cut back on discretionary purchases like clothing and home accessories — Target’s core strength — and focus on necessities like groceries, products the retailer struggles to keep stocked.

“The stores looked bleak because the shelves are empty,” Campbell said. “And with higher prices from inflation and high tariffs on imports, shoppers are really not very willing or able to buy those impulse items that were a staple of their business model.”

Analysts suspect that Cornell scapegoated crime to avoid responsibility.

Still, his threat to close stores and disclose financial losses from shoplifting felt, well, excessive. After all, Target’s numbers at that moment weren’t great, but they weren’t that bad.

“I don’t think anybody really expected that from Target,” Spieckerman said. “But to me, frankly, it did come from the top down. Cornell felt vulnerable. There’s really no other explanation for it.”

Weird messaging: criminals and extremists are laying siege to our stores.

As it turns out, Cornell’s warnings over rampant shoplifting and homophobic extremists were an overreaction at best. Target never again talked about crime in detail when discussing financial results. And while the company, like many other retailers, has had to close stores over the past three years, Target never said the reason was shoplifting.

The executive who informed me about pulling Pride products insisted at the time that the decision was meant to protect store employees and customers. But the person declined to say whether Target contacted the FBI or even the police.

People also seemed to forget that Walmart sells plenty of Pride merchandise but didn’t warn about extremist attacks.

In June 2023, a group of top state law enforcement officials, including those in New York, Massachusetts and Minnesota, released a letter criticizing Cornell, suggesting Target had not even bothered to contact them about providing extra security to stores before withdrawing the products.

“If Target again finds itself facing anti-LGBTQIA+ harassment — whether of customers or employees — store management or the corporate office are encouraged to reach out to our offices,” the letter read. “We are ready, willing, and able to work with you in the spirit of progress, inclusivity, and equality.”

Political controversy rarely impacts financial results of a major corporation in any meaningful way. But in Target’s case, the company was nourishing a monster it had created.

For one thing, Target’s aspirational strategy depends on consumers visiting its stores because they are bright, fun and hopeful. Otherwise, they might as well just shop online.

But in just two weeks, the retailer painted a picture of criminals and extremists laying siege to its stores. That image certainly didn’t help its sales struggles. It also reinforced the larger pattern: Under stress, Target was no longer defining confidence but broadcasting fear.

“These stumbles tarnished the brand,” said Gerald Storch, a former vice-chairman of Target who also served as CEO of Toys R Us and Hudson’s Bay. “The issues were handled poorly.”

For 2023, Target said same-store sales fell a sharp 3.7%. The company recovered a bit the following year with a minuscule 0.1% gain. But in 2025, same-store sales dropped 2.6%.

Onlines sales were still growing but people weren’t visiting or shopping at its stores.

Target didn’t just make a series of missteps. It responded to pressure in a fundamentally different way than it had in the past — not by defining itself, but by retreating from itself.

“Target is totally off track,” Storch said. “They lost their direction. They don’t remember who they are anymore.”

When Donald Trump assumed the presidency in January 2025, he immediately started to attack DEI programs at corporations, universities and law firms, among other institutions.

Target was especially vulnerable given the company’s reliance on foreign goods and Trump’s penchant for using tariffs as a cudgel. He didn’t specifically mention Target, but the retailer heard the message loud and clear. The company quickly ended DEI goals, the Racial Equity Action and Change program and stopped participation in external surveys like the Human Rights Campaign’s Corporate Equality Index.

Target’s swift retreat from DEI stunned supporters, still reeling after the retailer pulled items from its Pride collection. In addition, the company launched many of these DEI programs after George Floyd’s killing in 2020.

The decision fit a pattern. Each time pressure mounted — crime fears, political backlash, social unrest — Target did not defend its identity. It retreated from it.

Burt Flickinger, managing director of New York-based Strategic Resources Group consulting firm, said Target’s fragility directly reflects its board of directors, which remains overwhelmingly white and male.

“Target is a narcissistic, self-absorbed chain store organization that has failed to recruit best-in-class talent,” Flickinger said. “They have one Latina director, no African American women, and no Asian women. I can’t find any LGBTQ people. It’s a board that doesn’t represent the customer base. They’ve got too many consultants. They forced out too many of the best and brightest women. The board has low to no term limits and low to no accountability.”

“It’s a completely rudderless group that’s leading the company,” he said.

What confused many observers is that Target’s DEI programs weren’t just symbolic gestures but essential to its identity as an aspirational retailer — one that promised people of all cultures and backgrounds affordable access to style and joy.

“They diversified their vendor base,” Campbell said. “They created multicultural agencies. They built product assortments. They invested in the gay community, not just with products and signs, but also supporting the community year-round. And that really translated into sales. They outperformed Walmart in multicultural consumer business for a sustained period. And that became part of their business strategy.”

The Dayton brothers believed growth would define Target. So, while many retailers focus on squeezing their core consumers, Target long distinguished itself by expanding the customer base itself — especially among Hispanic/Latino shoppers, Asians, women and younger urban consumers, including college students and Millennials.

In other words, inclusion wasn’t separate from the business model. It was the business model.

A year later, Target was again affected by the White House agenda. Trump, who vowed to crack down on illegal immigration, sent thousands of ICE agents into the Twin Cities as part of Operation Metro Surge.

The result was the arrest and detention of U.S. citizens, Native Americans, refugees, and legal immigrants awaiting status as agents swept through schools, homes and businesses. ICE agents also shot and killed Rene Good and Alex Pretti, two white U.S. citizens who were observing their operations.

After agents detained and later released two U.S. citizen employees at a Richfield Target store, activists protested at Target headquarters, demanding the retailer prohibit ICE agents from entering stores.

Target did not publicly comment on this incident, another example of the company’s incoherent message. After all, this was the company that loudly proclaimed protecting employees and customers was its top priority when it spoke about shoplifting and pulling Pride products off its shelves.

The silence reinforced a growing perception: Target was no longer leading with values, only reacting to events — or, in this case, reacting with silence.

Recovering delight

Today, Target sits at a crossroads. The company hasn’t grown annual sales in three consecutive fiscal years, a stunning fall for a retailer long synonymous with profitable growth. The retailer had previously achieved 61 straight years of annual sales increases from its founding in 1962 until 2023.

Those weak sales have had real consequences, especially in the Twin Cities. Last year, the retailer eliminated nearly 2,000 employees from its corporate headquarters, its first major layoffs in a decade.

The company named Michael Fiddelke CEO and moved Cornell to executive chairman. In his first public remarks as CEO, Fiddelke suggested Target return to its roots as an aspirational retailer, repeatedly using the word “delight.”

The company plans to spend $5 billion this year alone to remodel stores, update technology, and train store employees. Analysts say consumers tend to have short memories and that Target loyalists will eventually return to stores.

But Target’s challenge is not operational. It is philosophical.

Lots of companies retreat when the economy turns bad or when politics get rough. But Target specifically built its growth on aspiration tied to inclusion and cultural confidence. Once that identity weakened, the business model weakened with it.

Target was built to delight.

But when outside pressure came, it revealed something more troubling: it was never built to endure.

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