For more than a year, Target (TGT) has suffered declining sales, significantly impacting its bottom line.
The decline in sales first kicked off during the summer of 2023 when the retailer faced a massive boycott from consumers over its pride collection, which faced criticism for being marketed toward children.
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Later that year, Target raised alarm bells about rising retail theft in its stores nationwide, which forced it to close nine locations in four different states.
Related: Target’s latest attempt to win back shoppers faces criticism
Most recently, Target also flagged that its customers have been pulling back on their spending in its stores even after it cut prices on thousands of items last year. The retailer blamed the change in customer behavior on economic pressures such as inflation and higher living costs.
In its fiscal third quarter earnings report, released in November, Target revealed that its comparable sales only increased by just 0.3% year over year. (Comparable sales refer to sales at stores open more than a year.)
Target is expected to release fiscal fourth-quarter results around March 4.
The money customers spent per purchase also shrunk by 2% compared to the same period a year earlier.
Target discontinues major initiatives
As Target struggles to win back customers, it has opted to make a controversial move.
The retailer has scaled back its diversity, equity, and inclusion program, a growing trend in corporate America that has garnered both praise and backlash from consumers.
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Target recently sent a memo to employees informing them that it will no longer be reporting to the Human Right Campaign, which tracks LGBTQ+ corporate policies and practices.
It is also ending its three-year DEI goals and will conclude its Racial Equity Action and Change initiatives.
Some of those initiatives include advancing careers of Black employees, instituting anti-racism training for team members, promoting Black-owned businesses, sourcing products from Black suppliers, prioritizing philanthropic investments to address racial inequities in Black communities, etc.
Related: Walmart, Lowe’s among retailers that caved to blowback in 2024
“Many years of data, insights, listening and learning have been shaping this next chapter in our strategy,” said Kiera Fernandez, chief community impact and equity officer at Target, in the memo. “And as a retailer that serves millions of consumers every day, we understand the importance of staying in step with the evolving external landscape, now and in the future – all in service of driving Target’s growth and winning together.”
Target, like many large companies across the country, first committed to these DEI initiatives in 2020 after the murder of George Floyd brought to light many inequities Black people face in America.
DEI is on the chopping block in corporate America
Target’s decision to scale back DEI comes after President Donald Trump issued an executive order on Jan. 21 that dismantles the federal government’s DEI programs. In the executive order, he claimed that the programs enforce “illegal and immoral discrimination.” Within the next day, he ordered all federal DEI employees to be put on paid leave.
Many large retailers such as Walmart, Lowe’s, Tractor Supply, have opted to cut their DEI policies amid scrutiny and boycott threats from conservative consumers who criticized the companies for going “woke.”
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The decision also followed the U.S. Supreme Court’s ruling in 2023 to end affirmative action in college admissions, which raised legal questions around DEI programs in workplaces across the country.
While some companies have decided to scale back or even completely axe their DEI policies, there are a few that have stood their ground against the anti-DEI movement.
On Jan. 23, Costco (COST) shareholders voted against a proposal to cut its DEI program. Also, according to a recent report from the Wall Street Journal, Goldman Sachs reportedly defended its DEI program against a group of shareholders who are looking to have it removed due to legal concerns.
A spokesperson for Goldman Sachs told the Journal that its DEI policies are in compliance with the law and that diversity can be beneficial for workplaces.
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