Target changes store delivery pickup under CEO Michael Fiddelke

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…