Target quietly stops competing with Walmart, Kroger in major area

Target has been suffering through an identity crisis as it switched CEOs and has struggled to rebuild its customer connection.

One of new CEO Michael Fiddelke’s first priorities has been to clean up the chain’s stores by simplifying operations for store managers.

“If you’re a store manager now, yes, you’re supporting your in-store guest and you’re also running a fulfillment business that’s gotten pretty big,” he told CNBC. “And I think we’re just now fully appreciating, ‘All right, we’ve got to make sure that we’re doing both really well and it’s more complex than it used to be.’”

GlobalData Managing Director Neil Saunders thinks Fiddelke has diagnosed that problem correctly.

“The main reason some of Target’s stores are so sloppy is because associates have been given more things to do without a corresponding increase in available labor hours. That means basic tasks, like replenishment and recovery, are not attended to. Removing or reducing online fulfillment from some stores will free up time,” he wrote on RetailWire.

Target also plans to make a major shift in its grocery section.

As a regular Target grocery shopper, I have always been a bit confused as to how the company saw its own offering. In some areas, it sells a selection of merchandise that rivals Walmart, Kroger, or other major grocery chains, while in other sections, it offered a more curated set of items.

Its fresh meat and fish selections were limited compared to Walmart or my local Publix, and the same has been true for produce.

Target’s Chief Merchandise Officer Cara Sylvester explained the chain’s grocery strategy during its fourth-quarter earnings call.

“We’re focused on what’s next, strengthening Target’s unique identity when it comes to food. We are not trying to be an everything grocer or just another grocer down the street. Instead, we’re building a truly distinctive grocery destination where emerging brands, wellness and owned brands intersect,” she said.

Abandoning the “everything grocer” idea means admitting that your customers will shop at rival chains, something most large-scale stores try to prevent.

Target has a different plan.

“Put another way, we’re bringing even more of our style and design authority to food for families looking for fun trend-forward options, whether it’s for lunch box snacks or a Tuesday night dinner. That’s why we’re delivering newness at twice the industry’s rate,” she shared.

“Rather than seek to convince shoppers to make it a primary destination for essentials — as rival mass retailer Walmart has done so effectively — Target is instead hoping customers will head to its stores to keep up with the latest trends,” wrote Retail Dive’s Sam Silverstein.

Target wants to be more of an experience than a traditional grocery chain, according to Sylvester.

“We’re also investing meaningfully in the in-store food experience because shopping for food at Target should feel distinctly Target, delightful, joyful, unlike what you’ll find anywhere else,” she said.

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That will include more in-store sampling.

“We’re expanding sampling, particularly on weekends, to create more opportunities for guests to discover something new, to try emerging brands and engage with our assortment in a way that feels energetic and experiential,” she added.

Target also has an incentive to get consumers to purchase items from its owned-and-operated brands (O&O).

Net profit margins for U.S. grocery stores are razor-thin: 1-2%, according to a report from Mercator Advisory Group.

O&O brands raise those margins.

“Private label products yield 35% profit margins compared to 26% for national brands, according to the Mercator data.

Walmart generally has cheaper prices than Target, but Target may be able to find a niche as a value seller of quality and interesting merchandise.

John Mercer, head of global research for Coresight Research, told Retail Dive that “history shows that retailers that, like Target, have lost share to price-competitive rivals have not been able to right the ship just by putting money into their stores.”

This approach, however, may be different.

“That’s why Target’s effort to stand out by carefully curating its grocery assortment could be the key to its success going forward — and underscores the importance for the company of finding ways to help shoppers cut their costs even as they seek out trendy goods,” Silverstein wrote.

Target, however, first has to get customers back in its stores.

“Foot traffic declined year over year in every month in the second half of the year except October, and fourth-quarter visits fell 2%. Traffic ticked up in January — overall visits rose 0.7% and same-store visits increased 0.2% — but Placer.ai attributed the gains to an extra Saturday in the month,” Supermarket News reported.

Weekend store visits for the Minneapolis-based retailer fell 6.1% year over year in 2025, compared with a 0.6% decline at Walmart. Target’s weekday visits decreased 1.3% year over year.

Related: Costco makes key gas move as pump prices rise

This story was originally published by TheStreet on Apr 4, 2026, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.