In February, Target moved work and investment from the center to the edge, and some good things have happened.
Target eliminated 100 roles from the layer between stores and headquarters, including district senior directors, HR partners and food-and-beverage coordinators. Another 400 were removed from supply-chain sites. Target consolidated its store districts and said the change would help better empower store directors.[1]
At the same time, Target made an “immediate addition” to store payrolls. It added labor hours and a companywide guest-experience course. In March, the company put hundreds of millions of dollars behind store payroll and training specifically, inside an incremental $2 billion for the year.
By May, more than 300,000 Target employees and leaders had completed the new training. It trained them against four measures: interaction with guests and coworkers, execution, teamwork and reliability. The stated aim was to make each Target trip easy, inspiring and friendly. Both Q1 and Q2 expenses included higher compensation from additional field hours. Q2 SG&A rose 7 percent, despite the earlier cuts. The restructuring reduced payroll in one part of the company while payroll costs increased closer to the sales floor.
In Q1, guest ratings for wait times, cleanliness, product availability and interactions with employees reached three-year highs. Target said stores receiving added support produced early gains in guest satisfaction. In Q2, satisfaction rose again. Inventory reliability reached multi-year highs, with record availability for Target’s most frequently purchased items. Same-store comps increased 3.8 percent and traffic rose 3.6 percent. Those are outcomes that store staffing can affect: shorter waits, stocked shelves, cleaner stores and employees available to help.
There are some confounding factors here, though. Target also cut prices on more than 10,000 items, changed nearly half its grocery presentation, refreshed major product lines, upgraded its inventory technology and began more than 100 store remodels. Ignore the headline doubling of earnings too: a $994 million tariff refund did much of that work. Two quarters cannot isolate the effect of the labor transfer.
Regardless, Target removed capacity from coordination and support, then added capacity where employees meet customers. Management linked some early service gains to that added support. More store labor and training also gave Target a way to execute everything else it was changing.
I don't want to glorify a layoff here. It's never good for anyone to lose their job, and the effects are very real on individual people. I hope that Target treated these with care and dignity, and that folks find better work on the other side. ↩︎
