Target Paying Heavy Price For Woke Marketing

Companies must decide when and how to present themselves in the cultural landscape during times of social evolution and change. One retail giant, Target, is now facing the real-world consequences of its choices in the marketplace.

Target unveiled a line of pro-transgender apparel this year, aligning itself with the larger “pride month” movement. However, their choice of items — from “pride” apparel for babies to “tuck-friendly” swimwear and designs by a self-acknowledged Satanist and transgender activist — did not sit well with a significant portion of their consumer base.

In financial terms, the backlash was undeniable. The company saw its stock decline steeply from almost $170 per share in April to just over $126 by mid-June. As per Target’s earnings report, this amounted to a hefty 5.4% decline in comparable sales and the first dip they’ve experienced in six years. They summarized their plight: “Total revenue of $24.8 billion was 4.9 percent lower than last year.”

While Target Chief Growth Officer Christina Hennington acknowledged this, hinting at modifications for next year’s pride merchandise, it raises larger questions about the tightrope walk of corporate involvement in social issues.

This isn’t a problem faced only by Target. Bud Light, under Anheuser-Busch, also faced the challenge after it decided to utilize transgender-identified influencer Dylan Mulvaney in its marketing. This move alienated a segment of their traditional consumer base, with stores in some areas essentially giving away the product to reduce excess inventory. 

Coinciding with these corporate missteps is an apparent societal shift. Recent surveys have highlighted an American trend leaning more toward social conservatism. A Gallup poll from May showed that this sentiment had reached its most pronounced levels since 2012.

Comparatively, Walmart is riding a wave of success. Boasting a 6.30% increase in same-store sales this quarter and a promising uptick in foot traffic and online purchases, the company is in sync with the nation’s consumers. Doug McMillon, Walmart CEO, commented on the resilience and trust of their consumers, emphasizing value.

Reflecting on the quarter’s downturn, Target CEO Brian Cornell said, “As we navigate an ever-changing operating and social environment, we are applying what we learned.” Adjustments have indeed been made, with controversial items removed from prominent display in stores and merchandise plans being recalibrated.

But the more significant concern for Target lies in its market value drop from $74 billion to $57.7 billion. While they anticipate the continuation of their Pride Month collection and other heritage months, the financial forecast for the year remains dreary.

Target has been tweaking its inventory to adapt, adding more daily-use products as customers adjust their spending habits. According to Cornell, the U.S. consumer is allocating more to food and essentials, leaving less room for non-essential items.

However, there might be a silver lining for Target. They earned an adjusted $1.80 per share for the quarter ending July 29, surpassing the expected $1.39. As John Tomlinson, Global Director of Research at M Science, remarked, the shares reflect stronger operating margins even with the dip in sales and the revised full-year outlook.

In the dynamic business world, it’s not merely about the products on the shelves but the cultural ethos that a company embodies. The challenge for brands, as both Target and Bud Light have seen, is in harmonizing corporate ethos with the preferences of their paying customers.