Target says it’s gearing up for a major overhaul to reverse its ongoing sales slump and will spend billions of dollars to make it happen.
Incoming CEO Michael Fiddelke said the company will invest about $5 billion in upgrades next year, which is a roughly $1 billion increase year-on-year.
The money will go toward improving stores, updating product selection, and strengthening Target’s website and digital systems.
“Mission 1 through 10 is to get back to growth for us,” Fiddelke told reporters in a call, according to the Wall Street Journal.
Shoppers have complained recently about messy stores, empty shelves, and less exciting products, the outlet reports.
Target says it wants to fix those issues through better store experiences, more appealing merchandise, and updated technology.
Target’s stock has dropped 35 percent this year. Executives say the additional investment is necessary after the company logged its 12th consecutive quarter of weak or falling sales.
The retailer reported that fewer shoppers came through its doors, and those who did spent less. Comparable sales, which track stores and online channels open for at least a year, were down 2.7 percent in the quarter ending November 1.
Target said it cut prices on 3,000 everyday items ahead of the holidays and plans to offer trendy exclusives like trading cards and Stranger Things merchandise.
In-store shoppers should also expect friendly interactions with staff this holiday season, as Target implemented its new “10-4 program” that requires employees to smile, make eye contact and greet customers within 10 feet.
Employees should offer help to customers once they’re within four feet, per the guidance.
Target is also rolling out a major new partnership with OpenAI, allowing shoppers to browse and add products to their cart directly through a ChatGPT-powered app.
Fiddelke said shoppers are still being careful about buying non-essential items like home decor and clothing.
He also cited that the latest quarter was unpredictable because of outside issues, including a pause in SNAP food assistance and the recent government shutdown.
Fiddelke said Target will have a better sense of future sales once the important holiday season is over.
Still, due in part to this uncertainty, Target lowered its profit forecast for the year to between $7 and $8 per share, down from $7 to $9, WSJ reports.
In the most recent quarter, Target’s net sales dropped 1.5 percent to $25.3 billion compared with last year, and its net income fell 19 percent to $689 million.
Fiddelke will officially become CEO on February 1, succeeding Brian Cornell.
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