Target’s sluggish performance in the first quarter of the year is being partially attributed to consumer backlash over the company’s decision to roll back its diversity, equity, and inclusion (DEI) policies. Shares of the retail giant dropped over 7% following a reported 3.8% year-over-year decline in same-store sales, mirroring a similar decline the previous year. CEO Brian Cornell acknowledged during the earnings call that the company faced multiple challenges, including consumer reactions to DEI-related policy changes announced in January.
Target Faces Boycott After Scaling Back DEI, While Competitors See Mixed Reactions
Target’s announcement to scale back its “Belonging at the Bullseye” strategy marked a significant shift in its commitment to DEI efforts. The strategy previously focused on increasing diversity in hiring and its supply chain, and the company also withdrew from external DEI surveys like the Human Rights Campaign’s Corporate Equality Index. These changes sparked outrage among certain consumer groups and advocacy organizations, most notably Black Wall Street Ticker, which initiated a 40-day boycott against the retailer from March 5 to April 17.
Consumer Backlash Over DEI Rollback Deepens Target’s Sales Decline and Brand StrugglesTarget is not alone in revising its DEI policies, joining the ranks of major corporations such as Walmart, Google, Meta, McDonald’s, Amazon, and Tractor Supply. However, the consumer response has varied significantly. For instance, while Target experienced a 6.8% drop in foot traffic during the week of March 3, Costco — a company that reaffirmed its DEI commitments — saw a 7% increase. This contrast underscores the potential consumer preference for brands perceived as maintaining strong DEI values.
Walmart Thrives Amid DEI Backlash While Target Faces Ongoing Struggles and Uncertainty
Despite facing its own criticism for scaling back DEI initiatives, Walmart reported a strong 4.5% year-over-year growth in same-store sales, outpacing expectations and far exceeding Target’s performance. Even with shareholder concerns about its DEI changes, Walmart appears to be managing the fallout more effectively, with analysts noting that it’s currently growing at four times the rate of Target. Experts suggest that Walmart’s clearer value proposition helps shield it from the same level of consumer disengagement that Target is experiencing.
Analysts warn that the backlash against Target’s DEI rollback may not be a short-lived issue. Unlike last year’s backlash over Pride merchandise, where the company provided transparency and assured investors the impact was temporary, this time, Target has been unable to quantify the boycott’s effects. Morningstar’s Noah Rohr emphasized that broader economic factors such as stiff retail competition and subdued consumer spending will continue to challenge the company. Target’s struggle to differentiate itself in the current environment could prolong its vulnerability to public dissent and financial underperformance.
