Target to Cut 1,000 Jobs as New CEO Blames Excess Management Layers for Slowed Growth

In an attempt to expedite decision-making and speed efforts to restore the declining discount retailer’s client base, Target said on October 23 that it is laying off roughly 1,800 corporate personnel. According to a corporate representative, the company intends to eliminate roughly 800 open positions and is anticipating sending layoff notices to about 1,000 employees next week.

According to the spokesman, the majority of the impacted employees are employed at Target’s Minneapolis headquarters, although the layoffs account for around 8% of the company’s corporate personnel worldwide.

Layoffs Part of New Business Strategy: New CEO

A statement outlining the downsizing was sent to Target employees on 23 October by Chief Operating Officer Michael Fiddelke, who will take over as CEO on February 1. He encouraged staff members at the Minneapolis headquarters to work from home the following week and stated that more information would be available on October 28.

In his note, 20-year Target veteran Fiddelke stated that the corporation has been hampered by the complexity it has built up over the years. Decisions have been slowed down by too many layers of overlapping work, which has made it more difficult to realise ideas. Walmart and Amazon have surpassed Target, which has roughly 1,980 locations in the US, in recent years as consumers have reduced their discretionary spending due to inflation.

Consumers have complained about disorganised stores with goods that don’t match the upscale-looking but low-cost niche that gave the business the mockingly upscale moniker “Tarzhay” in the past.

Fiddelke’s Three Urgent Priorities to Revive Target’s Business

Regaining the company’s position as a leader in merchandise selection and display, enhancing the customer experience by ensuring that shelves are regularly stocked and stores are clean, and investing in technology are the three top priorities Fiddelke stated when he was named Target’s next CEO in August.

In his letter to staff, he listed the same objectives and described the layoffs as a “necessary step in building the future of Target and enabling the progress and growth we all want to see.” One aspect of the task that lies ahead of us, he added, is modifying Target’s structure. In order to improve its retail leadership in style and design and facilitate quicker execution, it will also be necessary to adopt new behaviours and set clearer priorities.

In nine of the previous eleven quarters, Target has reported flat or declining comparable sales, which include sales from both established physical stores and online outlets. Comparable sales fell 1.9% in the company’s second quarter, which also saw a 21% decline in net income, according to an August report.

According to a company spokeswoman, Target’s sorting, distribution, and other supply chain workers will not be impacted by the job layoffs, nor will any staff working in its stores. According to the spokeswoman, severance packages and compensation and benefits would be provided to the corporate employees who lose their employment until January 8.