Target Reverses Its ‘Store-as-Warehouse’ Strategy to Fix Shopping Experience, as New CEO Joins

Target is scaling back its signature “stores-as-hubs” model, a major pivot from its decade-long strategy of fulfilling nearly all online orders from its retail locations. The move, announced by incoming CEO Michael Fiddelke, is a direct response to declining sales and operational strains that have hurt the in-store customer experience.

• A tale of two stores: The new playbook, detailed on Target's Q2 2025 earnings call, divides its locations into two camps. Stores deemed "built to fulfill" will handle more digital volume, while others will be told to "shut your pack station down and sit this one out," allowing them to focus on in-store shoppers and drive-up orders.

• When strategy meets friction: The shift addresses growing problems where the frantic pace of packing online orders led to empty shelves and frustrated customers. The pivot follows a disappointing quarter where both sales and operating income fell year-over-year, adding urgency to the course correction.

• Fiddelke's first play: The fulfillment reset is one of the first signature moves from Fiddelke as he prepares to take the CEO role in February 2026. Admitting that the company is not realizing its "full potential," he is betting the move will restore consistency to the store experience and help regain momentum.

Target is conceding that trying to make every store do everything was undermining its core retail advantage. The new strategy is a calculated bet that focusing stores on what they do best will be key to reviving growth. The changes to in-store fulfillment aren't the only ones shaking up Target's supply chain, as the company is also laying off over 200 workers at a traditional distribution center in Indianapolis. Wall Street appears to be cautiously optimistic, giving Target's stock a modest lift after the reset was announced.