Dive Brief:
- Target will invest $1 billion in the guest experience this year, CEO Michael Fiddelke said speaking to investors about Q4 2025 earnings Tuesday. The retailer’s plans include expanding personalized loyalty rewards and reorganizing its store operations.
- The retailer has “seen real traction” with personalized games and rewards in the Target Circle loyalty program, according to EVP and Chief Merchandising Officer Cara Sylvester. In the spring, Target will expand its focus on personalized rewards.
- While digital sales are strong, Target’s leadership admitted that the company has been slipping on its in-store experience. “For millions of people, even in a digitally-led world, stores are the single most tangible expression of our brand, and for decades, they have set Target apart,” Sylvester said during the call. “But we've heard clearly from our guests and from many of you that our in-store experience has been inconsistent.”
Dive Insight:
Target wants to elevate its experience in-store and online to rebuild its brand loyalty with consumers.
“Delight is our standard,” Fiddelke said during the call. “That means getting the basics right — sharp pricing, strong in-stocks, wicked fast same-day delivery — yet our bar is higher. We want to spark an emotional connection.”
The company has work ahead. The retailer’s comparable store sales fell 3.9% year over year in the fourth quarter of 2025, according to an earnings release. Net sales fell 1.5% year over year to $30.5 billion, though comparable digital sales rose 1.9% year over year.
Target is listening to its customers as it prepares to improve its experience and turn its fortunes around, according to Fiddelke.
“It starts with clarity about the retailer we are in the experience we create for our guests,” Fiddelke said. “It's about doing the work to build connections with new guests, deepen relationships with existing guests, and earn back trust.”
Top issues include stores that feel cluttered and have too many out-of-stocks or experiences that feel transactional, according to Sylvester. Changes being made at the corporate level and at Target’s supply chain facilities will support store-level changes to solve these problems.
Target is adjusting individual departments as part of its effort. Certain stores are piloting an enhanced service model in their beauty departments, and the company will invest in curated discovery zones in its baby departments.
The retailer will also lean into technology to let associates spend more time with customers overall, according to Fiddelke. Investments in AI tools are expected to improve the human experience as well.
“The humanity of the store experience is part of our secret sauce,” Fiddelke said. “Every minute we can save a store team member unloading a truck, or even in the steps they take across the store, is a minute that they can reinvest serving our guests.”
Shoppers are satisfied with Target’s same-day delivery services, as they receive some of the highest net promoter scores among any of the retailer’s services, according to EVP and CFO Jim Lee. Same-day services generated more than $14 billion in sales in 2025, accounting for two-thirds of Target’s total digital sales.
Target’s loyalty offerings have been strong as well, according to Sylvester. Unpaid Target Circle members spend three times more on average compared to non-members, while those in the paid Target Circle 360 program spend seven times more.
