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The retail business is brutally competitive. Sears Roebuck once dominated retail in America (and built the highest skyscraper in the country at the time as its headquarters in Chicago). Sears lost its way and its competitive edge and the savvy entrepreneurs behind companies like Walmart, Amazon and Target took its place.
Target Corp. was created in 1962 by the department store chain Dayton’s, headquartered in Minneapolis (and the company took Target as its corporate name in 2000).
Target has long been a source of pride for Minnesotans and a darling of national retail. The company’s brand became synonymous with marrying affordability with on-trend design and for sharing its business success with strong community support.
But the last few years have been bruising for Target — for its sales, earnings and brand image alike. The company is taking steps to turn things around to make sure it doesn’t join Sears in a long line of companies that faltered badly.
Target announced a major corporate restructuring that includes layoffs concentrated in its downtown Minneapolis headquarters where it employs some 7,000 people.
Briefly, the company last week announced plans to eliminate about 8 percent of its global corporate staff — roughly 1,000 positions — and close another 800 open roles. On Tuesday, notices filed with the state of Minnesota showed the layoffs will affect more than 500 workers at Target’s downtown Minneapolis headquarters, and nearly 300 workers at its northern campus in Brooklyn Park. They’ll take effect Jan. 3.
Store and supply-chain workers are not affected. The restructuring, downsizing, rightsizing — pick your favorite euphemism — is the company’s biggest shake-up since 2015.
At the center of this reorganization is Michael Fiddelke, Target’s veteran chief operating officer and soon-to-be chief executive officer, who takes the helm in February. Fiddelke’s message is straightforward: Target needs to move faster.
The restructuring is designed to simplify operations, trim overlapping functions and reduce the layers of management that have slowed decision-making. The company needs to regain its competitive nimbleness.
There’s no denying that the company’s recent performance has lagged behind its biggest rivals. Sales have slipped, foot traffic has declined for 18 straight months, and net income in the second quarter fell 21 percent.
Meanwhile, Target’s decision to scale back its diversity, equity and inclusion programs appears to have hurt its brand reputation. The stock market tells a stark story: Target’s stock price has fallen by nearly two-thirds since mid-2021, while Walmart and Costco shares have more than doubled.
Even casual shoppers notice something’s off. On a recent visit to a local Target in St. Paul, I was struck by some half-empty shelves and it didn’t appear that there were many employees on the floor.
It’s anecdotal, yes — but the impression mirrors a growing perception that the Target experience simply isn’t what it used to be.
The layoffs come at a tricky moment for the job market. The employees losing their positions are highly skilled and will bring impressive resumes to their job search.
Some Minnesota employers — still contending with a relatively tight labor market — may see this as a chance to scoop up top-tier talent. Others may find the labor less than hospitable.
In essence, the overall job market in Minnesota and nationwide is “frozen.” Workers are reluctant to leave their current jobs, worried it might be tough to find another. (The Big Quit or the Great Resignation are fast becoming a distant memory.)
Employers, meanwhile, are hiring more cautiously amid a fog of economic uncertainty —compounded by the on-again, off-again U.S. tariffs on foreign goods and the unpredictable impact of artificial intelligence on future staffing needs.
For downtown Minneapolis, Target’s retrenchment adds another layer of pain. Before the pandemic, the blocks surrounding Target’s headquarters buzzed with energy at lunchtime, filled with employees grabbing food or running errands.
The company’s recent push to bring more workers back to the office may continue, but with fewer employees. That’s bad news for the small businesses that depend on the corporate crowd— restaurants, coffee shops, and retail vendors already struggling to regain their footing.
The layoffs largely reflect Target’s internal struggles and missteps. Management under new leadership is under pressure to fix its merchandising mix and customer experience if it wants to stay competitive. However, Amazon announced on Oct. 28 that it will lay off about 14,000 corporate employees and that the company isn’t done with layoffs, either.
In a blog post, Amazon wrote that the idea behind the layoffs is to make the company more nimble and less bureaucratic — just like Target. The blog post also emphasized the impact of artificial intelligence on its business.
Both the Target layoffs and the Amazon layoffs signal that businesses in the highly competitive retail sector are emphasizing cost cutting and efficiency to boost profits. These two restructurings could well turn into an early warning signal of where the broader economy is headed. We’ll get a better idea about the message in the layoffs once the upcoming holiday shopping season is in the rearview mirror.
English (US) ·