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- [00:03]
Morningstar Representative
Data is everywhere, but is it ready for consumption? Morningstar developed the language of global investment data so you have the right ingredients to help you shine. Morningstar, where data speaks.
- [00:17]
Alex Osola
I'm Alex Osola. This is what's New Sunday and this is part two of our special series about Target and the boycotts against its business. In our last episode, we talked about how the company got here, about how Target made inclusivity an important part of its brand, and why some shoppers felt upset when the company seemed to go back on that. In this episode, we dig deeper into the boycotts against Target. We look into whether they may have an impact on the company's bottom line. And we talk to black entrepreneurs who sell their goods at Target and tell us how they fared. So when Target changed its diversity, equity and inclusion policies in January, it made some shoppers unhappy. We reached out to Target for a comment on this series and they responded with the following written statement.
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Target Spokesperson
We are absolutely dedicated to fostering inclusivity for everyone, our team members, our guests and our supply partners. To do that, we're focusing on what we do best, providing the best retail experience for the more than 2,000 communities we're proud to serve.
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Alex Osola
In the weeks following Target's DEI rollback, several organizers from around the US announced boycotts against Target. One came from a church outside Atlant.
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Jamal Bryant
In the season of Lent, which is the 40 days leading up to Easter. Our church is going to be in a fast of 40 days of consistent prayer. I am calling for a 40 day fast from Target.
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Alex Osola
That's Jamal Bryant. He's the senior pastor at New Birth Missionary Baptist Church, a predominantly black congregation of 10,000 in Stonecrest, Georgia.
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Jamal Bryant
Not since the Montgomery bus boycott has black America come together in such a unified vision, a unified focus and a unified front.
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Alex Osola
The boycott, dubbed Target Fast, came with four demands. In addition to honoring its previous pledge of committing $2 billion to black owned businesses and restoring its previous DEI commitments, the boycotters asked that Target deposit $250 million into black owned banks and that it create community retail centers at 10 historically black colleges and universities. The boycott kicked off on March 5th and was scheduled to end on April 20th. Easter Sunday producer Jess Jupiter and I were at New Birth's Easter Sunday service to learn where the boycott stood.
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Jamal Bryant
Make me sing it. You may be seated. Can I thank those of you that been on the Target fast with us? If you ain't been going to Target, open up your mouth and give God glory.
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Alex Osola
Earlier that week, Bryant had met with civil rights leader Reverend Al Sharpton and Target CEO Brian Cornell in New York City. To Bryant, even just having the meeting and its location was a sign that the boycott was successful.
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Jamal Bryant
We didn't meet in Minneapolis. They flew to New York. And so I think their presence spoke to our impact.
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Alex Osola
At the church service, Bryant said that Target told him that the company would complete its pledge of $2 billion for black businesses. But Bryant said that they had not agreed to all four demands. A Target spokesman confirmed that the meeting happened, but wouldn't discuss any details.
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Jamal Bryant
So I told them what I'm getting ready to tell you. We ain't going back. So the fast shifts to a full out boycott.
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Alex Osola
Bryant and his team are still figuring out the details for the next phase of the boycott. But what started as an initiative with a clear end date now could go on for the foreseeable future. Bryant told me that getting to this point hasn't been easy.
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Jamal Bryant
In the last two weeks, it was the last mile of the Boston Marathon. People said, pass. Is it over? When will this be over? When they found out that I was meeting, did we come out? Is this finished? But people have to get a second win to know that we have been doing this for 10 weeks. But the Montgomery bus boycott went for 381 days. We really got to gather our strength. To see a win really means a lot to the morale and to the momentum of our people.
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Alex Osola
For Bryant, ending the boycott will be Target's job, not his.
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Jamal Bryant
Again, I really think that the yeoman's job is going to be Target's responsibility. A lot of people, no matter what I said today, were not going to go back in. And so I am not a salesman or a pitchman for Target. When and if that time comes, then they're going to have to do the heavy lifting and it is not.
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Alex Osola
The organizers behind Target FAST have partnered with other black activists who created boycotts against Target over its DEI pullback, such as Nina Turner, a former state senator from Ohio and the founder of the pro labor nonprofit We Are Somebody.
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Nina Turner
So the message is that we're all in this together. There's power in our purchase and people should join us in this boycott because you don't have to do a whole lot. It's easy to join. Just don't shop at Target.
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Alex Osola
There are other boycotts going on too, like one organized by civil rights lawyer Nekima Levy Armstrong out of Minneapolis. She announced a national boycott on January 30 in front of Target's headquarters there.
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Nina Turner
Target has been a central part of this community and the lives of many People in this community, if something like this is happening in our backyard and it's involving a company that has stated values around diversity, equity and inclusion, has made this commitment in the aftermath of George Floyd being killed, we're not going to let this happen on our watch without a fight.
- [06:08]
Alex Osola
It's hard to know how many people across the US are participating in one of these organized boycotts. Jamal Bryant said at the church service that by Easter, 200,000 people had signed up on Target Fast's website. Meanwhile, other shoppers have independently decided to take a break from Target because of its change in DEI policies.
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Target Spokesperson
I completely refuse to spend my money with Target.
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Alex Osola
Lawrence Carter is a black 29 year old living in Dallas. Right after Target's announcement, he said he stopped shopping there. Even though there's a store right around the corner from his home. He says he wants to show the company that it does need diversity.
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Target Spokesperson
We live in a consumer economy, so the biggest way that you can say I don't like this, I don't agree with the direction that this is going.
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Alex Osola
Is to spend money or not spend.
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Target Spokesperson
Money at a particular location.
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Alex Osola
46 year old Terry Cripps, a white woman who lives in Jacksonville, Florida is also boycotting Target indefinitely. Not only did she say she spent a few thousand dollars a month at Target, but she used to work there when she was younger. And so that made the DEI rollback feel personal. The very day that I learned that.
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Target Spokesperson
They were going to be dropping their.
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Alex Osola
Diversity, equity, inclusion accessibility practices, I was shocked. I was absolutely shocked. This was a company that actually aligned with my moral values, you know, and so when I heard that, it's almost like it was a gut punch. Of course, not all Target shoppers feel this way. Producer Jess Jupiter and I spoke to two friends, Marissa and Shannon, outside the Brooklyn Target. They had both heard about the boycott, but only Shannon had changed her shopping habits because of it.
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Sarah Nassauer
Curious if you heard about that at all.
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Alex Osola
And has it affected your shopping? I have been boycotted.
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Nina Turner
I have not.
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Alex Osola
For Marissa, who was still shopping at Target. She said it was primarily because of the convenience and the price that Target offers.
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Nina Turner
Honestly, like if I get it at bodega, it's going to cost three times the price.
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Alex Osola
And I mean I can't afford that.
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Nina Turner
So it is Target. Yeah, Target's got Fair enough.
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Alex Osola
So the price is more important than like the other, the stuff going on with the company. I mean, I'm not going to say.
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Nina Turner
It'S more important, but my financial well being is most important to me.
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Alex Osola
Some people have cut back on their spending at Target. Others haven't. So are the boycotts actually affecting Target's bottom line? More on that after the break.
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Morningstar Representative
Data is everywhere. When orchestrated properly, it sings. At Morningstar, we analyze and enrich data, making it actionable and powerful for you. Morningstar, where data speaks.
- [09:17]
Alex Osola
It'S been about four months since Target made changes to its DEI policy. How has its business been affected since then? When asked by reporters, Target has not given details. Here's reporter Sarah Nassauer, who covers Target for the Wall Street Journal.
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Sarah Nassauer
Target did have an investor day earlier this year after they released earnings. Almost every single reporter, except for a few, tried to get Target to comment directly on whether, you know, a negative reaction to how it was handling. DEI was having an impact on sales or traffic, and the executives did not directly answer the question. So I could see something like that happening again? Well, there'll be some question of it, and we'll just have to wait and see how they respond.
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Alex Osola
For this series, we also asked Target whether the boycotts are affecting its business, and they didn't answer the question. The effect on Target's business is something that financial analysts are also wondering about. There's another boycott fresh on their the 2023 boycotts over pride merchandise, during which customers offended by a transgender friendly swimsuit knocked down displays, threatened store employees and put posts on social media with video from inside stores. They also stopped shopping at Target, which had an impact on the company's quarterly and annual revenue. Now, with these latest boycotts around dei, analysts are looking for signs that history could be repeating itself.
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Morningstar Representative
This so far has been a lot smaller than the boycott that Target initially went through. The boycott Target initially went through was about 5 points of their business, about 5 percentage points, 5% of their business went away.
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Alex Osola
That's Bill Kirk, a managing director at investment bank Roth Capital Partners, where he covers, among other things, retail. He's recalling that for its second quarter in 2023, Target's sales declined about 5%.
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Morningstar Representative
And this so far does not seem like a five points of business. But that's why it's a risk everybody needs to pay attention to, because if it does get bigger, things get worse quickly.
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Alex Osola
Kirk is one of the many analysts who are watching to see if that risk does get bigger. One place he's looking is online sentiment.
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Morningstar Representative
We're trying to monitor just how loud it gets and if it starts to kind of escape maybe the groups that are organizing it, because once it gets out of that immediate group, then it becomes a kind of a real boycott.
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Alex Osola
Alt Index is a website that provides alternative data for investing. It calculates investor sentiment by scanning online investor forums and then feeding that into an artificial intelligence model to assess whether the post is positive or negative. According to Alt Index's data, investor sentiment around Target between January 1 and April 30 of this year remained positive, though it fell about 12% in the same time frame, Walmart's fell 19% and Costco's rose about 16%. And what about Target's stock price as of May 16? It has fallen about 27% so far this year in comparison to the broader market as measured by the S&P 500. That was up 0.7% in the same period last month. Target stock hit its lowest price in more than five years and recorded its worst performance to start a year through May 16th since 1973. But Michael Baker, managing director and head of consumer research at investment firm DA Davidson, isn't put off by that. He has a buy rating on Target stock because he thinks its price will go up in the future. It hasn't done particularly well, but we think that's reflected in the stock price. We think there's a lot of bad news priced in One way to get a sense of how Target's business is doing is with traffic data. How many people are actually in stores now? This data isn't always accurate, but it can give us a sense of the trend. Also, the boycotts may not be the only reason for Target's presumed traffic decline. We'll get into that a little later. Still, traffic data is something that Joe Feldman, senior managing director at consulting brokerage firm Telsey Advisory Group, monitors closely.
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Joe Feldman
We track traffic data through some third party resources like Placer AI and their data would indicate that you've seen a little bit of an impact from the boycotts early days when they Target first announced that DEI changes, you saw a fairly sizable drop off in their traffic and demand trends and we'll see what they say about the first quarter, but it does feel like it's been a little bit softer.
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Alex Osola
Location analytics company Placer AI uses tens of millions of devices like cell phones to track people's locations as they shop. In the month of March, data from Placer AI showed that foot traffic in Target stores was down 6.5% from the year before. Walmart's foot traffic during that same time frame fell 3.8% and Costco's was up 7.5%. Traffic isn't the only kind of data that can give us a sense of how Target is doing. Another type to consider is consumer spending. A company called Numerator collects consumer spending data and has assembled a panel of 150,000 people that it says are balanced to be representative of the entire US population. According to Numerators data, in the four weeks ending February 9, when some of the earliest boycotts had started, Black shoppers spent 27% less at Target than they had in the same four week period a year earlier. But they spent 55% more at Costco and 38% more at Walmart. And it's not just analysts looking at this data. The boycotters are presenting it as a way to show their efforts have been successful. Here's Nina Turner, one of the organizers.
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Nina Turner
As we can see, with diminishing foot traffic, the stock shares are going down on Target. We are having some successes.
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Alex Osola
But measuring the success of a boycott isn't always straightforward. Braden King, a professor at the Kellogg School of Management, has spent his career thinking about this. He told me that yes, boycotts do work, just not in the way that most people think.
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Target Spokesperson
So boycotts tend to be effective not because they have an effect on consumer sales, but rather because they create a lot of negative media attention for the company that they're going after. And that creates a reputational threat which companies don't like. And so they tend to respond to boycotters because they're trying to avoid a hit to their reputation.
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Alex Osola
When faced with a boycott like the one against Target, King says companies have a few ways to approach it.
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Target Spokesperson
What companies want to do is immediately get out of the news. And so right now, one of the things that Target has going for them is that the news cycle is very short and there's lots of noise. One strategy they might take is simply to wait it out, knowing that eventually other things are going to take on more importance for these activists and consumers than what is occupying their attention right now. In fact, it's highly likely that in six months we will not be talking about this at all.
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Alex Osola
But boycotts aren't the only challenges to Target's business right now. More on those after the break. Isn't home where we all want to be? Reba here for realtor.com, the Pro's number one most trusted app, the Finding a home is like dating. You're searching for the one. With over 500,000 new listings every month, you can find the one today. Download the realtor.com app cause you're nearly home. Make it real with realtor.com Pro's number one most trusted app based on August 2024 proprietary survey over 500,000 new listings every month based on average new for sale and rental listings February 2024 through January 2025. It's not just the boycotts. Target's business is facing a number of challenges. Here's Joe Feldman from Telsey Advisory Group.
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Joe Feldman
I think in the big scheme of headwinds against Target, boycotts ranks lower. I think the boycotts, it's like a small group, group of people making a loud claim and the reality is that the day to day and the average consumer is not really responding to that. I do think that they've made an impact, but I'm much more worried about tariffs and the impact that that might have on their business and the broader consumer environment.
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Alex Osola
Analyst Bill Kirk ranked his concerns for Target's business tariffs.
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Morningstar Representative
1 Walmart 2 consumer health 3 and then the boycott kind of comes in with that consumer health. Like how's that, how's that consumer feel?
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Alex Osola
Target.
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Morningstar Representative
So I guess I would list it fourth.
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Alex Osola
Tariffs are highest on his list because Target is more exposed to their impact than some of its competitors.
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Morningstar Representative
Among the companies I cover, Target sources the most product internationally. They import the most stuff more than even Walmart.
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Alex Osola
Also, Target carries more things that people want and don't necessarily need, which puts the company at risk when shoppers budgets get tight. Here's reporter Sarah Nassauer.
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Sarah Nassauer
Again, if you're feeling a little cash strapped, you might not need the throw pillow or the new jacket or whatever and so you might forego that purchase. So there's a sense that it's just more discretionary and that means that as prices overall go up because of tariffs, potentially that Target could lose some market share.
- [19:02]
Alex Osola
Another potential risk for Target, backlash from shoppers opposed to dei. Activist investor Robbie Starbuck uses social media to stoke outrage about companies DEI policies and pushes for companies to change them. Walmart, Tractor Supply, Deere and Harley Davidson are just some of the companies that were targeted by Starbuck and later changed their policies, though many cited other reasons for the rollback. In November, when Walmart announced changes to its DEI policies, Starbuck indicated that he was setting his sights on Target. When Target announced its DEI changes, Starbuck published a video taking credit.
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Joe Feldman
Knowing that a story was coming, Target executives wisely got together and figured out how to get rid of some of these woke policies. And when we learned they were making changes, we decided to focus on the changes instead of going through and exposing all the crazy stuff which can happen at a later date if they continue.
- [19:57]
Alex Osola
With grazing this Target declined to comment. In February, a number of Target shareholders sued the company claiming that Target had not disclosed the risk of boycotts around its DEI and environmental, social and governance policies and that Target quote, downplayed the scope of consumer boycotts after they began. The company's regulatory filings show that starting in 2021, the retailer warned that its position on DEI and ESG could harm its reputation and result in boycotts. We reached out to Target about this and they declined to comment. Americus Reid, a professor of marketing at the Wharton School, says that no matter what Target did, it wasn't going to please everyone.
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Target Spokesperson
You're basically going to irritate everybody because.
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Alex Osola
You'Re sort of trying to like, walk the, the fine line. You're trying to sort of split the difference. It doesn't work. The boycotts have likely had an impact on Target's business. How big an impact isn't totally clear yet, but there's one group that's really feeling the effects of the boycotts. Black business owners with products carried by Target now worried that they might be at risk of losing some business over dei. Take Houston White. As a child in Minneapolis, White grew up shopping at Target with his mom. In 2019, he said that he met some Target executives when they started coming into his barbershop and they just wanted.
- [21:21]
Joe Feldman
To hear about my insights and thoughts around, like how they could connect with their guests, but then also how they could retain talent of color.
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Alex Osola
Soon, White was selling some of the items that he had on sale in his barbershop just in the local Minneapolis Target store. Those sold well, and after a year and a half of development in collaboration with Target, he brought his apparel collection to Target stores nationwide and online in 2022. He also now sells coffee and personal care products with his brands, the Get Down Coffee Company and Fresh by Houston White with Target. White says that when he learned about Target's changes to its DEI policy, he was disappointed, but trusted that Target was doing what it needed to do to stay in business.
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Joe Feldman
I was extraordinarily disappointed, honestly, by the reaction in my community. I didn't want to have a knee jerk reaction that could lead to a lot of unnecessary collateral damage to a lot of brands that I think that this institution means to do well. But we're just in very difficult environment. So I felt like, let me give him some grace and see where this is going.
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Alex Osola
Though he says his bottom line has suffered, White says his collaboration with Target is still strong and he's optimistic for the future.
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Joe Feldman
We still are doing fine and we'll weather the storm. We've seen some softness in certain areas, but still feel good about the overall direction.
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Alex Osola
Beautiful Curly Me is another company that's been feeling the impact. The company sells black and brown dolls with curly hair and braids. Its CEO is 13 year old Zoe Oli and Ivana Oli is its COO and mom in chief.
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Nina Turner
Mom in chief is a fun name the team gave me because our company is actually run by my now 13 year old daughter. And so I'm mom and so I have to kind of take care of all the things that an adult needs to take care of.
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Alex Osola
Beautiful Curling Me started selling its dolls in Target stores last year. Oli said that's become a six figure revenue stream for the company.
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Nina Turner
We've definitely seen our sales affected our sales at Target specifically. So yes, we've seen the entire category kind of decline in sales.
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Alex Osola
Despite this, Ollie says they have a good relationship with their Target rep and even hope to expand their partnership in the future.
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Nina Turner
It's such a big deal to get on Target shelves. It's not an easy feat for us to get on Target shelves. So as hard as it is to get on, it's actually easy for them to kick us off the shelves if we're not performing. And so for us, our focus was really all about just maintaining the relationship we have with our buying team. And the fact that we've seen success since we launched on their shelves has been our priority.
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Alex Osola
So the boycotts have definitely affected some, some black entrepreneurs, but even so, some business owners see it as an opportunity to find a new way to connect with customers.
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Nina Turner
To be honest, I feel empowered by that actually, because I believe in community. That's how we build our brand.
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Alex Osola
Kim Roxy is the founder of Lamique Beauty, a vegan makeup company. Target started carrying her products on its website almost two years ago.
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Nina Turner
Felt impact from our, you know, sales on.com on target.com. but what I will say is that we're seeing better awareness from like a community level, more grassroots.
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Alex Osola
So that's the reason I was speaking to her at the Bullseye Black Market, a marketplace of black entrepreneurs put together by the organizers of the Target Fast boycott. Roxy had flown from Tulsa, Oklahoma to Atlanta to try to reach more customers directly. And though she was a little worried for the next phase of her business, she was upbeat.
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Nina Turner
I'm not wallowing, you know what I mean? I'm not wallowing because I know that there's another wave of support that's coming. So if I can just hold out, I think it'll work.
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Alex Osola
Some black small business owners who don't have their products carried by Target. Sellers say that given the opportunity, they would still work with the retailer. Malik Saleem, who runs a plant based laundry detergent company called tru, is one of them.
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Nina Turner
Yeah, we're not boycotting anybody.
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Jamal Bryant
We want everybody to carry our product.
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Alex Osola
Because it's a universal product.
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Jamal Bryant
So yeah, we want everybody to carry our product.
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Alex Osola
So what does Target's future look like? Despite the damage the boycotts have done to Target's reputation, most of the analysts I spoke with said they're generally optimistic about Target's future. And according to FactSet, as of May 16, 13 ratings firms said Target stock was worth buying, 23 thought it was worth holding onto and one recommended selling last week. Equity research firm Bernstein pointed to the DEI strike as one of the reasons Target's business has suffered and said that these boycotts seem to be having a more negative impact on the company than the 2023 Pride boycotts. A Target spokesman declined to comment on the impact of this boycott compared to the 2023 boycott. As for the boycotters, they're still not shopping at Target. They say they won't end the boycott until the company meets their demands. Here's Target fast organizer Jamal Bryant speaking at the Easter Sunday service.
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Jamal Bryant
Ladies and gentlemen, whether you realize it or not, we are now in the new civil rights movement at new Birth. You are in the epicenter of what is getting ready to take place.
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Alex Osola
Target is expected to report its quarterly earnings on May 21st. Ahead of those earnings on the week of May 4th, Target CEO Brian Cornell sent an email to staff reiterating the company's core values.
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Target Spokesperson
We are still the Target you know and believe in, a company that welcomes all and aims to bring joy to everyone every day. We will always be dedicated to serving millions of guests in all 50 states and our more than 400,000 team members across 2,000 communities. Which means we will keep finding new and different ways to meet people where they are. But our values, inclusivity, connection, drive are not up for debate. They are non negotiable, period.
- [27:36]
Alex Osola
Analysts anticipate that the company, like many others, will lower its outlook for 2025. How big a role the boycotts play in that and how the company talks about them is still anyone's guess. And that's it for what's New Sunday for May 18th. This series was produced by me, Alex Osola with supervising producer Michael Kosmides. Additional support from Falana Patterson, Chris Zinsley and Anthony Banci. Michael Lavalle and Jessica Fenton are our sound designers and wrote our theme music. Aisha Al Muslim is our development producer. Scott Salloway and Chris Inslee are our deputy editors. And Falana Patterson is the Wall Street Journal's head of news audio. I'm Alex Osola and we'll be back tomorrow morning with a brand new show. Until then, thanks for listening.
- [28:27]
Morningstar Representative
Data is everywhere. But is it ready for consumption? Morningstar developed the language of global investment data so you have the right ingredients to help you shine. Morningstar, where data speaks.