Target Withstood DEI Boycotts To Show Signs Of Reputation Recovery

“We’re starting to see the twinkle of a new ‘Tarzhay’ emerge in its reputation, which tracks in line with people’s intent to purchase. It is literally winning over and winning back one customer at a time," said RepTrak's Stephen Hahn. (Photo by Bryan Bedder/Getty Images for Target)Getty Images for TargetIn a year marked by a record number of consumer boycotts, Target has emerged as the undisputed leader in consumer outrage and activism. It all started in late January, when Target rolled back its diversity, equity, and inclusion policies. It announced that its three-year DEI goals had been achieved, and it was shifting focus to the “Belonging at the Bullseye” strategy to advance community engagement and business results. The belonging strategy backfired big time.Before the bruhaha began, Target drove a 1.5% net sales increase in the fourth quarter last year, even as fiscal 2024 came in with a 0.8% decline. After that, Target’s sales went into a nose-dive with revenues down 1.7% through the third quarter to $74.3 billion and net earnings off 11% to $3 billion. Its stock price has dropped around 30% this year.Yet, there are signs that anti-Target sentiment is beginning to burn out and customers are reconsidering engaging with Target once again, based upon corporate reputation consultancy RepTrak. “What the data tells me is Target is going through a rebound and recovery mode in terms of its reputation,” shared Stephen Hahn, Reptrak’s chief reputation and strategy officer, based on data collected in the company’s Compass continuous reputation monitoring service. “We’re starting to see the twinkle of a new ‘Tarzhay’ emerge in its reputation, which tracks in line with people’s intent to purchase. It is literally winning over and winning back one customer at a time,” he said.MORE FOR YOUTarget’s Tumultuous YearTarget entered the new year with its December 2024 reputation almost as high as it was in April 2023, before the consumer backlash from its Pride Month displays. It took a good year and a half to rebuild its strong corporate standing.All that good will was lost by the end of January after it canceled its DEI program and calls to boycott Target erupted on the eve of February’s “Black History Month”—Target couldn’t have picked a symbolically worse time for its announcement. Target’s reputation dropped from strong to average by the end of January as activists groups began to organize, and the People’s Union USA called out Target as one of its prime offenders for its February 28 “Economic Blackout Day.” Its reputation held at average level through April, then the bottom dropped out in May, coinciding with the 40-day “Target Fast” called by the Rev. Jamal Bryant during the season of Lent. It fell into the weak/vulnerable range that month, well under levels reached after Pride Month in 2023. However, Target’s reputation started a fairly steady rise in the months that followed, getting a nice bounce coinciding with the back-to-school season. Its reputation retreated somewhat after two boycotts—“We Ain’t Buying It” and “Mass Blackout”—were organized around the Thanksgiving weekend from Black Friday through Cyber Monday yet remain in the average range. Reptrak’s Hahn believes Target has a long 12 months ahead to make its reputational rebound secure. “These early signs are good, but the question is whether it is sustainable,” he said, as he noted that just recovering its reputation isn’t enough. The most important metric for the company is the consumers’ intent to purchase, which has followed the same trajectory as its reputational score. “Target shouldn’t be looking to gain reputation for the sake of reputation. It must be looking to regain its reputation for the sake of driving the business,” he observed.Reputation Drags On ResultsTarget’s reputation has suffered from negative consumer sentiment, but its business performance hinges more on consumers’ intent to purchase. That measure has fallen sharply from a high of 65% in January 2023 to 42% currently, a loss of 23 percentage points, according to Compass. That doesn’t bode well for Target’s holiday performance, and it’s been baked into guidance for the fourth quarter, with the company expecting a low-single-digit decline in sales. This comes off third quarter when revenues dropped by 1.5%.However, while Target’s cultural missteps and resulting boycotts have turned consumers off, Hahn says that a company’s products and services are consistently the business area with the most influence on a company’s reputation across the seven dimensions Compass measures, including innovation, performance, leadership, workplace, conduct, and citizenship.

Products Count For MoreThe latter three dimensions—workplace, conduct, and citizenship—have been a drag on Target’s reputation, but consumers’ perception of its products and services going downhill counts for more. “Over the last two years, Target has lost some of its ‘Tarzhay-ness,” he observed. “One of the things that made its products uniquely Target was that it offered bold, stylish, affordable and good quality products. One can argue that its merchandising and product mix have become a little bland by comparison to the past.”Incoming CEO Michael Feddelke promised to return Target products to its previous gold standard. “We must solidify our design-led merchandising authority, leading with incredible product in a way that is distinctly Target,” he said in the third quarter earnings call. He stressed the need to get back to building “a unique assortment of the right, stylish, on-trend products at incredible value that’s so central to who we are and key to our differentiation and future growth.” Target’s just opened SoHo concept store is proof in the pudding. “Target SoHo marks a bold new chapter in Target’s commitment to style and design, bringing the brand’s DNA to life in an immersive, experiential format that’s as shoppable as it is inspiring,” it said in a statement. Resetting Target’s Moral Compass While returning the “Tarzhay” magic to its product offerings can do the heavy lifting for its reputation and consumers’ intent to purchase, its conduct, workplace and citizenship issues will continue to act as a brake in its full recovery if not addressed. Conduct is measured by being open and transparent, ethical and fair in doing business. That measure has dropped by five percentage points across the informed general public this year. Workplace is calibrated to how fairly the company rewards employees, concern for employee well-being and providing an equal opportunity workplace. That dropped four percentage points after the rollback of DEI policies.Citizenship relates to environmental policies, supporting good causes and being a positive influence on society. That value has also dropped this year.“This all hits home in terms of the need to recalibrate Target’s moral compass to win back lost customers. It needs to make good for some of its judgment calls related to LGBTQ and DEI issues,” he said.Second ChanceThere’s no question that Target bungled its announcement about concluding its DEI program and realigning its “supplier diversity” team. Its stated strategies at the outset looked good on paper, specifically, it stated:Our team: We recruit and retain team members who represent the communities we serve and fuel a culture where everyone has access to opportunity and growth, enabling our team to deliver business results.Our guests: We aim to create joyful experiences through an assortment of products and services that help all guests feel seen and celebrated, increasing relevance with consumers.Our communities: We build deep and lasting relationships with the communities we serve, driving impact, economic vitality and connection that fuels loyalty.But those fine sentiments didn’t ring true once readers got to the end of the notice.However, with Fiddelke stepping into the CEO position on February 1, he has a rare chance for a do-over of past policy missteps. While the company is unlikely to reinstitute its DEI program—it’s gone nearly a year without changing course—it can reframe the Belonging message to get in step with its customers’ values.“Target has yet to publicly declare what its new vision strategy is and to truly introduce new leadership to the marketplace,” Reptrak Hahn said. The right Belonging statements coming from the new CEO could be a major milestone in recovering its strong corporate reputation among employees, disenchanted former customers and potential new customers. And with its reputation intact, improved corporate performance should follow.“We are seeing the early stages of recovery, but it’s going to be a long 12-month haul before we see a full bounce back of the ‘Tarzhay’ we all know and love. It’s just going to take some time to recover from those recent misdemeanors,” Hahn concluded.