Across Minnesota on Friday, people are participating in an economic strike to protest Immigration and Customs Enforcement’s crackdown. The state is home to 17 Fortune 500 companies, including UnitedHealthcare, 3M, and Best Buy. But one company, Target, has become the center of the tension over ICE operations.
On Jan. 8, immigration officials detained two Target employees, who are U.S. citizens, during their shift in Richfield, Minnesota. Videos of the arrest quickly spread on social media.
The recent events have caused renewed backlash against Target, nearly a year after boycotts began over the company rolling back its diversity, equity, and inclusion initiatives.
Target CEO Brian Cornell was once an outspoken supporter of DEI initiatives following the murder of George Floyd in Minneapolis in 2020, and the company was seen as a strong advocate for Black and LGBTQ+ businesses and customers.
But Target eliminated its three-year DEI goals and stopped participation in external diversity surveys, after the election of President Donald Trump, who opposes such policies.
In April, Cornell met with civil rights leader Rev. Al Sharpton and Jamal Bryant, an Atlanta pastor. Bryant shared his demands for Target to open locations on the campuses of 10 Historically Black Colleges and Universities (HBCU), complete its 2020 pledge to spend $2 billion on Black small businesses, reinstate its original DEI hiring and promoting goals, and invest $250 million into 23 Black-owned banks.
Target has not committed to these specific demands, but the company has continued to work with organizations such as the Russell Innovation Center for Entrepreneurs, which supports Black small business founders with education, mentorship, and access to retail opportunities. The company also supported HBCU programs under its “HBCU, Always” series, an effort to connect graduates with Target’s mentorship network.
Boycotts coincide with lower profits and foot traffic
“I think what Target didn’t do very well with the whole DEI situation was management of the situation and communication,” said retail analyst Neil Saunders, who is managing director at GlobalData, citing Target’s work helping business founders, communities, and charities. “None of that has gone away, and I think it probably should have been brought to the fore more in the conversation.”
The boycott over Target’s DEI rollback coincided with a major downturn in foot traffic and sales for the company.
Still, Saunders says there is more to the company’s 19% profit slide to $689 million in the three-month period ending Nov. 1.
“Target is currently grappling with how to create a better experience for customers, because over the past few years, the experience in store isn’t as good as it used to be,” he said. “There are issues like out of stocks on some products, and that’s really just putting customers off going to Target as much as they once did, or spending as much there as they once did.”
Over the Fourth of July weekend, Saunders visited a Target and posted 15 photos on LinkedIn that documented shelves that were understocked (or completely empty) and in disarray.
“There’s too much friction from the experience,” he said, adding that consumers are more cautious about spending on discretionary items and are weighing shopping with other retailers. “Target seems to be aware of this, and it says that it is taking action, but certainly over the past year, it has been a real problem.”
In its Q3 earning call in November, Chief Operating Officer Michael Fiddelke, who will take over as CEO, told analysts the company is investing in resources to improve in-store stock, such as using machine learning to optimize movement between suppliers and stores.
“It’s helping us move inventory more efficiently, improve our reliability for everyday frequently purchased items, and further improve in stocks,” he said.
New crisis, new approach
Now Target is facing a new crisis, this time over ICE.
The company has not issued any public statements about ICE operations in their stores or about the two employees who were detained. Target told Fortune it has no comment on the strike in Minnesota or the backlash against the company.
On Thursday, Chief Human Resources Officer Melissa Kremer said in a memo to employees that the company’s security teams are increasing communication with Minneapolis-based workers about expected disruptions near its locations, Bloomberg reported. Senior leaders are engaging with government officials, community partners, faith leaders and other stakeholders, Kremer said in the memo.
Bloomberg reported that employees are sharing frustration over the company’s silence on internal Slack channels. Some have sent a letter to Target’s ethics team expressing concern about the lack of a statement from the company and seeking guidance on how to handle law enforcement operations. Staffers from at least two stores have told managers they’re too afraid to come into work, sources told Bloomberg.
On Jan. 15, more than 100 clergy and community members gathered at Target’s downtown Minneapolis store to present demands and ask to speak to the CEO. They urged the company to call for an immediate end to the ICE operations in the state, to deny ICE agents entry into stores without a signed judicial warrant, and to call for Congress to stop funding ICE.
Cornell agreed to meet with representatives from the protest on Thursday, according to the organizers. Clergy members involved in the meeting did not respond to a request for comment.
Saunders said Target often sees itself as a community retailer, so it’s important for the company to give community leaders a space to air their views.
He added that Target’s messaging to employees about ICE was reasonable but that everyone is hoping for a change in operational strategies and customer experience.
“It’s not going to be enough for some people,” Saunders said. “The vast majority of customers are very much in the middle. They’re interested in politics. They may have views, but they don’t let it affect their shopping decisions, not for these kind of things.”
The post Target faces new backlash amid Minnesota ICE raids after boycotts over its DEI rollback. But don’t blame politics for falling profits, analyst says appeared first on Fortune.
