Analysts told ADWEEK that the problems go beyond cultural flashpoints.

Target’s incoming CEO, Michael Fiddelke, is facing a big problem before his first day on the job.

The longtime Target exec will officially take over the reins from Brian Cornell in February. The retailer has reported 11 straight quarters of flat or falling sales and has seen boycotts from both sides of the political spectrum over the past two years. Target has also struggled to stock products and maintain strong customer service in stores.

Over the past year, Target’s stock has fallen 62% while Walmart’s stock has grown 20% and Amazon’s stock is up 53%.

Analysts and retail experts told ADWEEK that the problems aren’t insurmountable—Target still has great locations and strong brand equity—but the issues go beyond the cultural flashpoints that have dominated news cycles. Marketing is part of the problem, but Target’s challenges include deep operational issues that determine how people shop.

“They’ve lost their Target-ness,” said Steve Dennis, a former retail executive and president and founder of SageBerry Consulting. “There was a clear step up from Walmart and the off-price folks—they had more service, a friendlier position, and private labels. It seems like they’ve lost that.”

During Target’s earnings call on Aug. 20, Fiddelke outlined three of his immediate priorities: Rebuilding Target’s merchandising strategy, improving the in-store experience, and investing in technology.

Stuck in the murky middle

For years, Target differentiated itself as a slightly premium retailer known for unique merchandise, including popular private labels like Cat & Jack, a line of children’s apparel, and food brand Good & Gather. The slogan “expect more, pay less” accurately articulated Target’s position, Dennis said.

“It was clear that they had a value positioning and that you’re going to get more,” he said.

But post-Covid, the retail landscape is divided between essential items and nonessential items. Walmart and Amazon have focused on essentials like grocery and basics, while retailers like T.J. Maxx and Sephora have invested heavily into nonessential products like fashion and beauty—leaving Target in the middle without a clear differentiator, said one retail advertising exec who spoke on the condition of anonymity due to relationships with retailers.

Walmart in particular has been gaining steam through innovating with new platforms and differentiating itself in marketing campaigns.

“They’re getting attacked at the bottom by retailers who are better at price,” the executive said. “Target is in this uncomfortable middle because they’re also not an affordable luxury to compete with Sephora and Coach.”

Target is pulling back on some of its partnerships with high-end brands. For example, Target and Ulta Beauty will end a five-year deal this month that placed Ulta shops in Target stores. However, a new deal with Warby Parker is expected to set up five pop-up stores in the second half of this year, according to Target.

The result is a slipping in-store experience for customers including long lines and missing products, said Sucharita Kodali, retail industry analyst at Forrester.

“There is not inventory in the store—there will be empty shelves where paper towels are supposed to be,” Kodali said. “One of the main reasons that people go to Target is to get staples like paper towels. When they don’t have that, that completely deters people.”

Brad Jashinsky, director analyst at Gartner, said that improving in-stock items and keeping stores clean could be difficult for Target.

“This sounds simple but requires a careful coordination between local, regional, and corporate staffing, including merchandising and operations,” Jashinsky said. “Staffing levels need to improve, training programs should be expanded, and every team needs to be measured to ensure these problems don’t continue.”

Fiddelke acknowledged the problems with the in-store experience when speaking on Target’s recent earnings call. He said that Target’s on-shelf availability metrics during the second quarter, “were the best we’ve seen in years.”

“We can never take for granted the love our guests show us when they affectionately refer to their local store as ‘my’ Target,” he said. “That’s loyalty we need to consistently go out and earn—from well-stocked shelves and clean stores to a friendly and helpful team and an online experience that brings inspiration and discovery, we want to delight our guests who shop with us every time they shop. As I’ve made clear, we have to do better here, especially in the consistency of our experience.”

A drop in innovative marketing

Target has long collaborated with fashion designers and brands to create unique lines of products using a playbook that builds up hype before the collection drops on Target’s website. But with more shopping happening on platforms like TikTok, Target is missing out on using TikTok to sell the products, said the retail advertising exec.

“They have an old Rolodex with those collabs—it feels like two companies who are not at their best hoping that they can save each other,” they said.

Still, these partnerships appear to be paying off for Target. In April, Target partnered with Kate Spade to sell 300 apparel, accessory, and home products, resulting in “the strongest” partnership that Target has had in a decade, outgoing CEO Cornell said on the recent earnings call.

Changing how Target handles design partnerships and product launches is one of Fiddelke’s priorities, he told investors during the earnings call. He said Target is developing an effort called Fun 101 to revamp its hardlines products, which include things like electronics, appliances, and toys.

“To reestablish our leadership here, we need to go beyond the occasional design partnership or new product launch and ensure we’re bringing this authority across each category in our business throughout the year,” he said. “That will require change, and that change is happening.”

Target has also faced backlash for its handling of diversity, equity, and inclusion issues. In 2023, Target removed some Pride Month merchandise. And in January, Target ended some DEI programs that supported Black-owned businesses, resulting in a grassroots boycott.

Forrester’s Kodali called the boycott “a huge cultural issue at Target,” adding that some investors wanted Target to hire a CEO from outside the company to solve for these types of cultural issues. Incoming CEO Fiddelke is a 22-year veteran of Target.

“A lot of people think that there needs to be a completely cleaning of house to start over again,” Kodali said.