Both large retail chains and small, independently owned businesses are bracing for the full impact of the Trump administration's tariffs, the steepest of which went into effect today. Not only is Target just as susceptible to these blows as everyone else, but they're also dealing with a boycott resulting from the company's decision earlier this year to scale back its previous efforts in diversity, equity, and inclusion (DEI) programs.
And the data backs up that shoppers aren't happy: According to a report in Fortune citing data from Placer.ai, foot traffic in stores fell for the ninth consecutive week, as of the seven days beginning March 24, despite this time frame including the much-hyped Target Circle Week. Plus, Target's stock price has been steadily declining since the 40-day boycott took effect in early March. Amid all the turmoil, there are now reports that Target is halting two big expansion plans, which could affect how you shop.
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Target is pausing its expansion of in-store Ulta Beauty outposts.
It's been four years since Target and Ulta Beauty announced a strategic partnership that would bring the latter into Target stores through a "shop-in-shop" experience. Now, there are Ulta Beauty outposts in roughly 600 Targets throughout the U.S. Originally, that number was expected to grow to 800 throughout 2025, but Ulta's new CEO, Kecia Steelman, recently said the company is pausing these efforts.
"In joint partnership with Target, we've made the decision to really lean into the 600-plus stores that are open this next year and really look at 'How do we continue to drive efficiencies and leverage the learnings that we’ve had to really unlock value for both of us collectively together?'" Steelman said at JPMorgan’s 11th Annual Retail Round Up Conference on Thursday, according to The Minnesota Star Tribune.
Though it's not entirely clear why the two companies made this decision, Ulta has suffered from weak sales during the past several quarters. As Best Life reported last month, Ulta faces stiff competition from rival Sephora, as well as Target's own beauty department.
To bolster the business, Steelman announced "Ulta Beauty Unleashed," a plan to "drive core business growth," "scale new accretive businesses," and "realign our foundation for the future," she explained on an earnings call. This includes refreshed digital platforms, more wellness merchandise, and, it seems, a shift away from new Target outposts.
As for Target's end of the deal, retail analyst Carol Spieckerman told The Minnesota Star Tribune that she believes the retailer has too many balls in the air.
"Target needs time to digest and fine-tune the dizzying number of national brand partnerships, exclusives, private brand upgrades and launches that it has initiated in recent months," she said. "Now more than ever, it needs to take a balanced approach to its business rather than chasing shiny objects."
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Target may also scale back on opening new small-format stores.
Target opened its first small-format store back in 2014. "Their flexible designs let us bring the best of the Bullseye into urban neighborhoods, near colleges and other areas where a full-size Target wouldn’t fit, so we can serve up easy and inspiring shopping experiences for new guests across the country," the company explained in a 2018 press release about the expansion of the concept.
According to a report in Modern Retail, between 2016 and 2021, Target opened roughly 20 small-format stores each year. However, in 2023, Target closed four small-format stores, citing declining foot traffic.
"Now, of the 38 stores currently listed on Target’s website as opening soon, most are full-size Target stores and only five will be under 100,000 square feet," they wrote.
To this point, in a March 2024 earnings call, Target CEO Brian Cornell admitted that the company moved away from small-format stores in the past couple of years to focus on larger stores with expanded grocery sections.
A. Christina Hennington, Target's Executive VP & Chief Growth Officer, agreed that the smaller stores are "difficult to operate" due to the research it takes to decide which merchandise to cut. They also don't offer the same opportunities to stock merchandise for digital orders.
However, it doesn't look like Target's larger plans to open more than 30 stores this year have changed. This will bring the company's total U.S. store count up to roughly 2,000.
