What's happening to Target's customer experience in 2026?

Target’s current state of customer experience is symbolic of what is happening in retail across the United States. Companies like Target are facing a reckoning brought on by geopolitics, evolving customer expectations, and the swift advancement of technology, specifically artificial intelligence (AI). The tipping point arrived as the holiday season approached, and Target unveiled its new 10-4 policy, an attempt to build trust and form a bond with customers.

The policy demands that employees within 10 feet of a customer must smile, make eye contact, and greet or wave to customers. Those within four feet of a customer must ask about the person’s day or if he or she needs any help.

“Heading into the holiday, we’re making adjustments and implementing new ways to increase connection during the most important time of the year,” Target’s chief stores officer Adrienne Costanzo said in November 2025, according to the Today Show.

Critics, however, say this policy is a lackluster and minuscule response to much bigger problems that have been plaguing the company for a few years and reached a crescendo in 2025. To understand Target's state of CX in 2026, this article analyzes the impact of three major challenges that began to arise in 2025. 

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Slumping sales

Slowing sales have been a problem for three straight quarters. Target is facing hurdles in trying to compete with Walmart’s lower price points and Amazon’s logistical superiority, according to eMarketer.

To begin this holiday season, Target faced a hurricane of issues. First, the third-quarter earnings failed to meet expectations. The company reported a bigger-than-expected drop in comparable sales, according to Reuters. As a result, the company offered price cuts and made investments in an attempt to appeal to U.S. consumers already jittery about spending. 

In fact, the trouble with sales loomed over the decision to implement the 10-4 policy. It prompted a reply from Jessica Stillman, a contributor to Inc.

"It's hard to argue with the idea that employees should be friendly and helpful to customers," she wrote. "Training your people to provide better service certainly makes sense. But if Target thinks that more mandated smiles will solve its sales woes, it's likely to be disappointed for a couple of reasons." 

In Stillman's assessment, the real problem is the U.S. economy, which is marked by uncertainty because of high inflation and rising prices because of President Donald J. Trump's tariffs. And more smiley employees are not going to address these deeper issues, she writes. 

Evolving customer expectations and spending habits

A number of publications pointed out that this uncertainty in the economy is changing the spending habits of customers. While shoppers unexpectedly broke records during the 2025 holiday season, they also took on debt and deployed buy-now-pay-later services at a higher rate than usual. From eMarketer: 

"Buy now, pay later (BNPL) is expanding its presence in holiday spending and becoming a go-to financing tool for shoppers looking to manage their spending.

The service drove $10.1 billion in November spending, a 9 percent jump year over year, per Adobe Analytics.

On Cyber Monday, BNPL accounted for about 7 percent of all spending—roughly $1.03 billion—making it the biggest single day for the payment method in U.S. history."

One of the reasons Walmart has gained a competitive edge on Target is that it sells necessities at lower costs, whereas Target has become known for selling stylish luxuries at a lower cost. There's a tale of two economies in the United States, one for those investing in the stock market, who are flying high and another for lower- and middle-class Americans who are struggling amid a cost-of-living crisis that includes higher prices for housing, groceries, and healthcare. 

While this is the reality for American families, Target and others had no choice but to raise prices. CNBC gives a thorough explanation of how the tariffs boxed retailers into a corner when it came to prices. 

The mounting financial pressure on the customer base, combined with new expectations about delivery time and convenience, is certainly impacting Target and its competitors. The number one customer behavior impacting annual plans for respondents of the latest State of CX survey is the expectation for instant service/delivery (43 percent). The demand for convenience is close behind with 40 percent of respondents citing it. 

The DEI debacle

When Trump took office for the second time in January 2025, he made it clear that the federal government was abandoning diversity, equity, and inclusion (DEI) policies and initiatives. This cast a fear over corporate America, and many companies followed the government's lead in eliminating or reinventing their DEI practices. Target was among those who followed Trump. 

However, Target had previously benefited from the loyalty of Black consumers, who appreciated the company's commitment to helping startups run by underrepresented people. 

"Target, the retail store giant, which had enjoyed a favorable status among Black shoppers because of its practice of helping advance the careers of Black entrepreneurs, has been largely avoided by Black shoppers this year after announcing that it was ending its vaunted diversity, equity, and inclusion initiatives," according to MS Now, previously known as MSNBC. "Now that its shares have plummeted more than 30 percent year to date, what is the beleaguered brand doing? Ordering its employees to smile more." 

What's next?

The company announced in August 2025 that it would welcome Michael Fiddelke, who has worked in merchandising, finance, operations, and HR, as its new CEO. He will start his tenure in this role in February 2026. According to Reuters, Fiddelke's plan includes: 

Investing $1 billion more in 2026 in new stores, remodels, and digital business improvements. 

New operational model across 35 markets that will have some stores fulfilling online orders while others stop doing it.

Improvements to in-store shopping that include digital tools, generative AI-powered gift finders, and a modernization of inventory. 

The company also already cut 1,800 corporate roles. This raises questions about morale among employees and puts a different lens on the 10-4 policy. 

"There are clearly storm clouds on the horizon for both the economy and Target. Should retailers address them by offering more deals, beefing up the essentials on offer, doubling down on the small luxuries consumers are more likely to treat themselves to in hard times? The answer to this question isn't yet clear," writes Stillman. "But one thing that definitely won't address the underlying problem is more smiley employees." 

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