Target plans to spend $2 billion to revamp stores to attract more shoppers as part of a turnaround plan under a new CEO who’s trying to pull the retailer out of a lengthy sales slump.

As part of these efforts, the retailer is set to spend hundreds of millions of dollars to hire more store workers and raise pay.

Michael Fiddelke, who started as the company’s CEO in February, said on a conference call with analysts on Tuesday that Target had begun a total overhaul of its 2,000-store network.

“If I were to step back and drew a heat map of the entire store, highlighting where we’re making changes this year, you’d see more change to what we sell and how we sell it than you’ve seen in a decade,” Fiddelke said.

Target has struggled over the past three years with strong competition from its low-cost rival Walmart, which has lured wealthier shoppers to its stores with more stylish merchandise and store displays. Target, once lauded as the nation’s top proprietor of “cheap chic” wares, had lost that advantage.

The retailer has also wrestled with lower consumer spending on discretionary goods. Stubborn inflation, a fragile job market and uncertainty across the economy has taken a toll on lower-income households looking to spend efficiently on necessities, like dish soap and dental floss, that aren’t Target’s specialty.

Target’s sales at existing stores fell 2.5% in the most recent quarter, but it expects a “small increase” in comparable sales this year as the planned changes take shape.

“Overall, we think there is more positive than not,” Michael Baker, an analyst at D.A. Davidson, wrote in a note to clients.

Fiddelke said he wants to improve Target’s product mix, especially in categories such as home decor and apparel. He pointed to an early template the company called “Fun 101,” with a focus on trends in sports, gadgets, games and pop culture.

“Target is not an ‘everything store,’” Fiddelke said. “That’s not what guests want from us.”

When he took the role last month, Fiddelke, 49, immediately faced a crisis that unfolded in the company’s hometown as Minneapolis residents protested immigration enforcement near its headquarters. Two Target employees in a nearby suburb were also detained by federal authorities.

Since then, Fiddelke, who started his career at Target as an intern in 2003, has reshuffled some of the company’s top executives and cut 500 roles, mostly in distribution centers.

Company executives indicated that the store reset will include major shifts in the retailer’s operating model. Investments will include locations that haven’t been improved in as long as 15 years.

“Our in-store experience has been inconsistent,” Cara Sylvester, Target’s newly named chief merchandising officer, told investors. “Too often, we’ve been cluttered, out of stock, or even transactional.”

Sylvester said the goal is to make stores easier to shop, with good visual presentation and friendly employees. She said management has given staff a “Greet, Help, Thank” framework for their interactions with shoppers.

Target, which last year paid its front-line workers an average hourly wage of $18.50, tested higher payrolls and found that it improved results. Median pay for retail sales workers in the United States in 2024 was $16.70 per hour, according to the U.S. Bureau of Labor Statistics.

With so many changes across the business, Target’s transformation is expected to take several years, Fiddelke said.

“We’re not going to get every single change right this year, but you’re going to see change,” he said.

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This article originally appeared in The New York Times.

By Kim Bhasin/Hiroko Masuike
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