Target layoffs reflect economic trends: ‘We’re starting to see cracks’

Incoming CEO Michael Fiddelke made his first major move Thursday, announcing Target Corp. would cut about 8% of its global corporate staff.

The Minneapolis-based company said its plan to cut about 1,800 jobs — roughly 80% in the U.S. — is aimed at improving efficiency and decision-making, not reducing costs.

Yet economists said the move reflects larger trends rippling through Minnesota and the national economy, which are only exacerbated by the company’s struggles over the past few years.

“Minnesota’s economy is a lot like the nation’s,” said Louis Johnston, professor of economics at the College of St. Benedict and St. John’s University. “The job market is kind of frozen right now. People aren’t quitting, and employers aren’t hiring. We’re starting to see cracks where businesses are finally deciding, ‘OK, we have to make a move.’”

With Target among downtown Minneapolis’ largest employers, and with the Twin Cities economy heavily reliant on professional corporate jobs, the announcement has raised concerns about what moves like this could signal.

Companies like Target and General Mills are looking ahead to slower growth, Johnston said, driven by new tariffs and economic uncertainty, which could dampen consumer spending. At the same time, advances in artificial intelligence are reshaping corporate workforces, especially for entry and mid-level positions.

Minnesota-based companies such as General Mills and Cargill, along with national chains including Walmart and Starbucks, recently have made cuts part of restructuring efforts.

He compared this moment to previous waves of technological change, for example when computers gradually replaced clerical workers. Adoption of AI has the potential to replace workers, improve productivity and create different jobs.

“The question is which force will be stronger, and right now, we can’t tell,” he said.

Target said in its second-quarter earnings that the company has invested in more than 10,000 new generative AI licenses.

While the retailer said its restructuring wasn’t about cutting costs, Johnston said there’s an economic reality to the move.

“Of course it is,” he said. “It’s not so much cutting costs as trying to keep them from growing as fast as they would otherwise.

The move comes during a transition time. Fiddelke, currently the company’s chief operating officer, takes over the CEO suite next year. Current CEO Brian Cornell will remain executive chair of Target’s board.

The retailer already has faced criticism for the similarity between Fiddelke’s move on Thursday and one made by Cornell a decade ago shortly after he took over the helm.

Cornell described his 2015 restructuring plan, which eliminated 1,700 jobs and closed 1,400 open positions, as a way to make the company “a much more agile, effective organization.”

Adam Duininck, CEO of the Minneapolis Downtown Council, said Target’s layoffs were difficult news for the city but not entirely surprising given the company’s recent challenges.

“There’s going to be some ebb and flow to industry cycles,” Duininck said. “But the concern that we have is we always want to be a city that is growing economically and has businesses that are thriving.”

About 170,000 to 175,000 workers come downtown now on a typical day, he said, so the loss of roughly 1,000 people may “move the needle a little bit” but won’t significantly alter overall activity.

The organization tracks headcounts for the city’s 15 largest employers. Last year, six grew, six stayed flat and three reduced staff.

Target’s downtown headquarters count was unchanged from 2023 to 2024, according to Downtown Council’s data.

“While the layoffs are unfortunate for affected employees, the mayor is confident Target will remain a key partner in strengthening and growing downtown Minneapolis,” a spokeswoman for Minneapolis said, adding that Mayor Jacob Frey has been in touch with the company.

It wouldn’t be surprising to see other major Minnesota employers make similar moves in the months ahead, Johnston said.

Target’s stock barely moved following Thursday’s announcement, suggesting analysts are waiting to see results — not just reductions, said David Bellinger, consumer growth director at Mizuho. He estimated the cuts could save the company about $100 million annually, which could go toward improving its website, stores and grocery offerings.

“Above all, we caution investors that the business has not yet had its ‘kitchen sink’ moment,” Bellinger wrote in an analyst note, adding that more restructuring could follow after the holidays.