Last year has been a difficult one for Target Stores due to the impact of the pandemic unwinding and changes in consumer behavior. Despite moving up in the rankings of the country’s largest retailers in 2022, Target saw a decline in revenue in the most recent fiscal year with comparable store sales down nearly 4%. The company’s revenue growth has flattened over the past six years, and analysts are projecting a lackluster 2024 with minimal revenue growth. This has been reflected in the company’s stock price, which spent 2023 slumping and currently trades barely above the price it did a year ago.
One of Target’s core problems is its lack of draw compared to leading discount grocers, particularly in a time when consumers are focused on food prices. With most of its revenue coming from non-food items, Target struggles to attract shoppers who visit competitors like Walmart more frequently. The company has also faced cultural missteps, such as a recent incident involving misidentification of historical figures in a Black History-themed product. Additionally, a class action lawsuit has been filed in Illinois alleging that Target operates an anti-theft surveillance system that violates privacy laws.
In an effort to catch up with competitors, Target has announced the relaunch of its up&up private label line and the introduction of a new line of branded low-priced merchandise under the dealworthy banner. The company has also launched a paid membership plan similar to Amazon’s Prime and Walmart’s own membership program. Despite these efforts, Target’s attempts to expand and innovate may be too little, too late compared to more aggressive approaches taken by competitors like Walmart.
While competitors like Walmart have focused on expanding in neighborhood shopping centers, Target has announced plans to upgrade its existing stores and add new full-sized locations over the next decade. However, some argue that Target’s strategy seems untested and reactive compared to other retailers. The company’s challenge of being in the wrong merchandise category at the wrong time, particularly as Amazon has emerged as a strong competitor in the general merchandise sector, highlights the need for a more assertive and innovative approach to remain competitive in the changing retail landscape.