Target, which has long relied on stores for online order fulfillment, is tweaking that model to try to improve shoppers’ experiences within the aisles, freeing up employees to keep items in stock and help customers.
By increasing the volume of online fulfillment at some stores and stopping it altogether at others, Target can make the business more predictable and speed up deliveries for customers, Chief Supply Chain Officer Gretchen McCarthy said.
Target is trying to snap a four-year sales slump and address customer complaints about sloppier stores and higher out-of-stocks.
People walk to their car after shopping at a Target store on Oct. 3, 2025, in Jersey City, New Jersey.
Gary Hershorn | Corbis News | Getty Images
Customers used to hold up Target as an example of how to run large, yet sparkling stores.
Yet in recent years, shopper complaints about sloppier aisles, longer checkout lines, locked-up merchandise and out-of-stock items have dogged the Minneapolis-based retailer, contributing to sagging sales.
To help fix that, Target is making a move that may seem counterintuitive: It’s shaking up its online strategy. The move is a response to Target’s unique strategy of fulfilling the vast majority of its e-commerce orders at its stores, which has stretched employees and inventory thin.
The company is now rolling out a new approach that designates only some of its stores as locations where employees pick and pack orders in cardboard boxes to ship to customers’ homes. Other stores have stopped fulfilling those orders entirely.
The company has expanded that plan to 36 markets as of the end of October, more than half of its 60 markets, after a successful pilot in the Chicago area, said Gretchen McCarthy, chief supply chain and logistics officer. It plans to expand that further in 2026.
The new digital strategy marks a shift for Target, which announced in 2017 that its stores would power the e-commerce side of the business. Target does not rely on huge fulfillment centers like Amazon. It instead has store employees pick products and pack them in cardboard boxes in backrooms to prepare most of its online orders — or about 98% in the most recently reported quarter. That turned all of Target’s nearly 2,000 locations into fulfillment hubs.
Target is trying to break a streak of about four years of roughly flat annual sales as two-decade Target veteran and Chief Operating Officer Michael Fiddelke gets ready to start as CEO in February. Fiddelke said on Target’s earnings call in August that improving the customer experience is one of his top priorities, along with regaining Target’s reputation for style and design and using technology to run a more efficient business.
In an interview with CNBC at Target’s Minneapolis headquarters in October, Fiddelke said the company’s “stores as hubs” strategy made the retailer’s e-commerce business both “cost-efficient” and “capital light” by relying on the facilities and workforce it already had.
Target’s digital sales have more than tripled since the Covid pandemic, jumping from about $6.6 billion in the fiscal year that ended in early 2020 to nearly $21 billion in the fiscal year that ended in early 2025.
But growth brought new challenges as attention and staffing got diverted to e-commerce, he added.
“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 said. “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.'”
“One of the things we’re focused on is, ‘How can we remove some of that complexity?'” he said.
Fewer boxes and more predictability
Target started the Chicago pilot project in May to designate stores that would continue to fulfill ship-to-home deliveries, McCarthy said.
Instead of having all 100 stores in the greater Chicago area pack the brown boxes, it’s concentrated ship-to-home fulfillment at a smaller number of locations. Eighteen stores have stopped fulfilling the online orders altogether and six locations ramped up shipping, McCarthy said.
Five stores in the region now handle about 30% of the ship-to-home volume in the Chicago market, she said.
All Target locations, however, will continue to fulfill orders for customers who pick up online purchases curbside or in stores.
“The store is still very much the hub of everything that we do,” McCarthy said. “We’re just getting more precise and maybe a little bit more refined in how we’re using all of those stores and our supply chain network.”
Target typically chose the locations that will handle higher volumes of ship-to-home orders because they had more space to pack boxes, lower foot traffic or a combination of both.
The change has brought several key benefits for Target, McCarthy said. Delivery trucks make fewer stops at stores, which saves transportation time and costs. Stores that pack delivery boxes can better plan their staffing. Customers have a longer window to order next-day delivery, as the company turns select locations into specialists.
In Chicago, for example, the cutoff time for next-day delivery is now 6 p.m. instead of noon, McCarthy said.
Yet one of the most notable changes for Target has been improvement in the store experience as employees have tasks to juggle to fulfill shipping orders, she said. In stores that no longer pick and pack brown boxes in Chicago, out-of-stocks have improved, in-store sales have risen, and the company’s surveys of shoppers measuring store cleanliness and the quality of employee interactions increased by 10%, she said.
Digital experiences for customers, which measure customers’ satisfaction with Target’s curbside or in-store pickup, improved, too.
Mike Deyle, group vice president for Target who oversees most stores in the Chicago area, said he attributes the improvements to employees having “more capacity to focus on both the in-store experience and the digital experience.”
But McCarthy added that Target hasn’t seen the same level of store experience improvements in the locations still picking and packing the boxes — a puzzle that the company wants to solve.
Target Corp. packages sit at the United States Postal Service (USPS) Merrifield processing and distribution center in Merrifield, Virginia.
Bloomberg | Bloomberg | Getty Images
Still more to fix
Yet Target’s new approach for fulfillment won’t address all of shoppers’ concerns.
Store traffic has fallen nearly every week since February, according to Placer.ai, an analytics firm that uses anonymized data from mobile devices to estimate overall visits to locations. That falling foot traffic reflects a mix of economic challenges, such as financial pressures on households from higher grocery prices, and company-specific issues, such as weaker merchandise, stiffer competition and customer backlash to the company’s stance on diversity, equity and inclusion.
Some shoppers have pointed out other aspects of some Target stores that have turned them off, such as locked-up items to prevent theft and long checkout lines.
Through a spokesman, Target declined to specify the number of stores that lock up everyday staples like deodorant, but said the majority of locations only lock high-value products like electronics.
Meanwhile, Target has tried to strike the right balance between staffed checkout lanes and self-checkout. In March 2024, it also capped almost all self-checkout lanes at 10 items or fewer to try to speed up the process, a move that Target said led to better customer experiences.
Compared with many big-box and warehouse club competitors, Target’s in-store experience remains a strength, but its advantage has weakened over the past four years, according to HundredX, a customer data insights firm which surveys shoppers about their brand experience.
For example, customers rated Target 35 points higher than superstore competitors including Walmart, Sam’s Club and Costco in atmosphere/cleanliness in October 2021, but that edge slipped to 20 points higher than rivals in October 2025.
But Target underperformed the same retail rivals on availability of items, HundredX found, based on its trailing six-month average of customer ratings as of this month. More than 43,000 customers have participated in HundedX’s surveys in the last 12 months.
Forty-three percent of Target customers had a favorable rating for its availability compared with 47% for retail peers. Shoppers who said they had positive experiences cited the close proximity of Target’s locations and availability of items for curbside or in-store pickup. On the other hand, customers with a negative perception cited stock consistency in stores as their top complaint.
Emily Haleck, a mom of three who lives in Lehi, Utah, and runs a business consulting firm, said she frequently visited Target when her kids were younger. Yet the store fell out of her routine as she noticed messier aisles, particularly the sloppy piles and mismatched hangers in the clothing section. She said she shops Target’s stores only about three or four times a year and makes weekly runs to Walmart, where she said she buys groceries and finds lower prices.
About a week ago, Haleck and her teenage daughter visited her local Target store in American Fork to find a birthday gift for her son.
They bought a Champion water bottle and Starburst candies for her son, a bathmat for her boys’ bathroom, makeup and conditioner for her daughter, and a $3 Christmas tree for her daughter’s room, along with two shirts for herself that she plans to return.
She said the experience felt the same as it had in recent years, with a long checkout line and “clothing chaos.”
At a time when Target is cutting about 8% of its corporate workforce, some analysts think Target needs to step up its investment in its stores. Scot Ciccarelli, a retail analyst for Truist, said he wants to see the company spend significantly more to better compete with rivals on price and improve store operations, including through more staffing and better technology.
“You can’t keep cutting costs,” he said. “You can’t cut your way to prosperity.”
He said if Target doesn’t make investments, it will continue to lose market share.
Fiddelke told CNBC that the company is “always looking at what’s the right level of staffing in our store,” but said it’s focused on reducing complexity to free up employees rather than adding to the payroll. He said Target will keep investing in store openings and remodels.
Fiddelke added Target’s internal metrics show its in-stock levels have improved sequentially over the past three quarters, and frequently purchased items are more reliably in stock.
During the busy shopping season, he said customers should expect Target to have better in-stocks than they saw a year ago.
But he said the company has more work to do on the other side of the holidays. More
