The targeted changes are in-store delivery under CEO Michael Fedelke

Customers are accustomed to holding out goal As an example of how to run large, shiny stores.

However, in recent years, shopper complaints about sloppy aisles, longer checkout lines, locked merchandise and out-of-stock items have dogged the Minneapolis-based retailer, contributing to declining sales.

To help fix that, Target is making a move that may seem counterintuitive: It’s changing its online strategy. The move is in response to Target’s unique strategy of fulfilling the vast majority of e-commerce orders in its stores, which has led to increased pressure on employees and reduced inventory.

The company is now rolling out a new approach that designates only some of its stores as locations where employees pick orders and pack them into cardboard boxes to ship to customers’ homes. Other stores have stopped fulfilling those orders entirely.

The company has expanded that plan to include 36 markets through the end of October, more than half of its 60 markets, after a successful trial in the Chicago area, said Gretchen McCarthy, chief supply chain and logistics officer. It plans to expand this further in 2026.

The new digital strategy represents a shift for Target, which announced in 2017 that its stores would power the e-commerce side of the company. Target does not rely on huge fulfillment centers such as Amazon. Instead, store employees picked and packed products into cardboard boxes in backrooms to prepare most of its online orders — or about 98% in the last reported quarter. This converted nearly all of Target’s 2,000 locations into fulfillment centers.

Target is trying to break a streak of nearly four years of nearly flat annual sales as Michael Fedelke, a two-decade Target veteran and chief operating officer, prepares to start as CEO in February. Fiddelke said on Target’s earnings call in August that improving the customer experience is one of his top priorities, along with restoring Target’s reputation for style, design and using technology to run a more efficient business.

In an interview with CNBC at Target’s Minneapolis headquarters in October, Fiddelke said the company’s “stores as hubs” strategy made the retailer’s e-commerce business “cost-effective” and “capital-light” by relying on the facilities and workforce it already had in place.

Target’s digital sales have more than tripled since the Covid pandemic, jumping from about $6.6 billion in the fiscal year that ended in early 2020 to nearly $21 billion in the fiscal year that ended in early 2025.

He added that growth brought new challenges as interest and employees shifted to e-commerce.

“If you are a store manager now, yes, you are supporting your guest in the store and you are also running an order fulfillment business that has become very large,” he said. “And I think we now fully appreciate, ‘Okay, we have to make sure we’re doing a really good job and it’s a lot more complicated than it was before.’”

“One of the things we’re focusing on is, how can we remove some of that complexity?” he said.

Target began the Chicago pilot project in May to designate which stores would continue to deliver ship-to-home orders, McCarthy said.

Instead of all 100 stores in the greater Chicago area packing brown boxes, the focus is on home shipping at a smaller number of locations. Eighteen stores have stopped fulfilling online orders altogether, and six locations have increased shipping, McCarthy said.

Five stores in the area now handle about 30% of the shipment-to-home volume in the Chicago market, she said.

However, all Target locations will continue to fulfill orders from customers receiving purchases online or in stores.

“The store is still the center of everything we do,” McCarthy said. “We’ve become more precise and maybe a little more precise in how we use all those stores and our supply chain network.”

Target typically chooses locations that will handle larger volumes of shipping-to-home orders because they have more room to pack boxes, Low traffic or a combination of both.

McCarthy said the change brought several key benefits to Target. Delivery trucks stop less at stores, saving transportation time and costs. Stores that pack delivery boxes can better plan their staffing. Customers have a longer lead time to order next-day delivery, as the company turns specific locations over to specialists.

In Chicago, for example, the next-day delivery deadline is now 6 p.m. instead of noon, McCarthy said.

However, she said one of the most notable changes at Target is the improvement in the store experience as employees have tasks they must juggle to fulfill shipping orders. In stores that no longer pick and pack brown boxes in Chicago, out-of-stock situations improved, in-store sales rose, and the company’s surveys of shoppers measuring store cleanliness and the quality of employee interactions increased by 10%, she said.

Digital customer experiences, which measure customer satisfaction with Target’s curbside or in-store pickup, have also improved.

Mike Dell, a Target group vice president who oversees most of the stores in the Chicago area, said he attributes the improvements to employees having “a greater ability to focus on both the in-store experience and the digital experience.”

But McCarthy added that Target hasn’t seen the same level of improvements in the store experience at locations that still pick and pack boxes — a puzzle the company wants to solve.

However, Target’s new approach to fulfillment won’t address all of shoppers’ concerns.

Store traffic has declined nearly every week since February, according to Placer.ai, an analytics company that uses anonymized data from mobile devices to estimate total visits to sites. The traffic decline reflects a combination of economic challenges, such as financial pressures on households due to rising grocery prices, and company-specific issues, such as poor merchandise, intense competition, and customer backlash to the company’s stance on diversity, equity and inclusion.

Some shoppers pointed out other aspects of some Target stores it has shut down, such as locked items to prevent theft and long checkout lines.

Through a company spokesperson, Target declined to say how many stores it is closing everyday staples like deodorant, but said the majority of locations are only closing high-value products like electronics.

Meanwhile, Target has tried to strike the right balance between staffed checkout lanes and self-checkout. In March 2024, it also limited nearly all self-checkout lanes to 10 items or fewer to try to speed up the process, a move Target said led to better customer experiences.

Compared with many big-box and warehouse competitors, Target’s in-store experience remains a strength, but its advantage has weakened over the past four years, according to HundredX, a customer data insights firm that polls shoppers about their brand experience.

For example, customers rated Target 35 points higher than department store competitors including Walmart, Sam’s Club, and Costco for ambiance/cleanliness in October 2021, but that advantage fell to 20 points higher than competitors in October 2025.

But Target underperformed the same retail competitors on item availability, HundredX found, based on a six-month average of customer ratings as of this month. Over 43,000 customers have participated in HundedX surveys in the past 12 months.

43% of Target customers rated its availability positively compared to 47% for their retail peers. Shoppers who said they had positive experiences cited proximity to Target locations and availability of items for curbside or in-store pickup. On the other hand, customers with a negative perception cited consistency of inventory in stores as their biggest complaint.

Emily Halleck, a mother of three who lives in Lehi, Utah, and runs a business consulting firm, said she visited Target frequently when her children were younger. However, the store broke out of her routine when she noticed more cluttered aisles, especially the messy piles and mismatched hangers in the clothing section. She said she shops at Target stores only about three or four times a year and visits Walmart weekly, where she said she buys groceries and finds lower prices.

About a week ago, Halleck and her teenage daughter visited her local Target store in American Fork to find a birthday gift for her son.

They bought a bottle of Champion water and Starburst candy for her son, a bath rug for her boys’ bathroom, makeup and conditioner for her daughter, a $3 Christmas tree for her daughter’s room, as well as two shirts for herself that she plans to return.

She said the experience looked the same as it has in recent years, with long lines to pay and “clothes chaos.”

At a time when Target is cutting about 8% of its corporate workforce, some analysts believe Target needs to increase its investment in its stores. Scott Ciccarelli, a retail analyst at Truist, said he wants to see the company spend significantly more to better compete with rivals on prices and improve store operations, including through more employees and improved technology.

“You can’t keep cutting costs,” he said. “You can’t cut your way to prosperity.”

If Target doesn’t make investments, it will continue to lose market share, he said.

Fiddelke told CNBC that the company is “always looking for the right level of staffing in our store,” but said it is focused on reducing complexity to free up employees rather than adding to payroll. Target will continue to invest in store openings and remodels, he said.

Fiddelke added that Target’s internal metrics show that its inventory levels have improved sequentially over the past three quarters, and that frequently purchased items are more reliably in stock.

During the busy shopping season, customers should expect Target to have better inventory than they saw a year ago, he said.

But he said the company has more work to do on the other side of the holidays.