Learning Curves Are for Losers - Target's Next Act, Costco's Durable Difference, and Sukoshi's Beauty Breakout

In this retail heat map episode, Carol Spieckerman decodes retail’s biggest retail stories and reveals the common threads. From Target's new CEO Michael Fiddelke’s rapid-fire executive changes to Costco's beautifully boring consistency driving $4.8 billion in membership fees, Carol connects seemingly disparate headlines to show how retail's great sorting process continues. Plus, surprising insights into Gen Z's restaurant preferences (spoiler: bundt cakes beat McDonald's) and why Asian beauty retailer Sukoshi is poised to disrupt Ulta and Sephora's dominance.

Key Takeaways

• Target's leadership shake-up reveals strategic priorities – New CEO Fiddelke consolidates merchandising under one leader, expands the board with Nike's John Hoke and ex-Walmart executive Steve Bratspies, and redeploys 500 positions to improve in-store experience. Carol analyzes why Target is doubling down on its traditional strengths (merchandising, design, marketing) while Walmart operates like a space-age technology company.
• Mall transformation isn't death, it's just different – With 1,200 malls remaining versus 1,500 in 2005, nearly half of redevelopments become mixed-use properties serving housing, healthcare, education, and community needs. Carol explains why prime real estate with existing infrastructure creates golden opportunities for developers.
• Costco's membership model generates unshakeable loyalty – Membership fees account for 50-65% of Costco's total profit, enabling razor-thin product margins while the iconic $1.50 hot dog combo (unchanged since 1985) drives customer devotion. Carol explains why "the worst Costco is like the worst pizza" and how tribal store loyalty eliminates comparison shopping.
• Gen Z restaurant preferences signal broader retail shifts – From Nothing Bundt Cakes to 7 Brew's service-focused coffee model beating Starbucks, Generation Z (ages 13-28) gravitates toward authentic, value-driven brands over corporate legacy names. Carol reveals why concepts like First Watch and Longhorn Steakhouse thrive by delivering Instagram-worthy experiences at accessible prices.
• Regional grocers and beauty disruptors prove specialization wins – H-E-B, Publix, Wegmans, and Hy-Vee succeed by leaning into regional identity rather than chasing national scale, while Canadian beauty retailer Sukoshi's 200+ Asian beauty brands create discovery experiences that big-box retailers can't replicate. Both examples show how focused expertise trumps broad mediocrity.

The Retail Reality

Carol identifies three crucial success factors for 2026: picking a lane and executing flawlessly (like Costco's pricing consistency), securing operational fundamentals before chasing innovation (Target's store-focused strategy), and tracking generational shifts that reshape entire categories (Gen Z's authentic service expectations, Asian beauty's permanent influence). The episode reveals how December's "flat" retail sales actually demonstrate consumer resilience amid tariff uncertainty and economic headwinds, with higher-income households maintaining confidence as middle and lower-income consumers grow cautious. Companies thriving through retail's ongoing transformation understand that operational consistency beats marketing theatrics, regional authenticity often outperforms national scale, and younger consumers reward genuine value over brand legacy. 

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Transcript

 Hi, and welcome to Spieckerman Speaks Retail with me, Carol Spieckerman. I help retail companies sharpen their market positioning so they can get credit for the great stuff they're already doing and accelerate growth. Through my workshops, advisory services, and thought leadership platforms, we'll bridge the gap between where retail's headed next and how you fit into that future.

Here on the podcast, I curate fresh takes on where retail's going next through my latest retail trajectories and interviews with experts who help us chart the course. Welcome back to another retail heat map where we dive into the hottest headlines and reveal what they really mean for retail's evolution.

The retail world's been absolutely buzzing with news. Over the last couple of weeks, I've been fielding media inquiries from around the globe on everything from mall transformations to Target's latest executive musical chairs, to why Gen Z apparently loves bundt cakes. As all over the map as it seems, these stories all connect to a few key themes.

First of all, the power of knowing exactly who you are and who you aren't. Secondly, the magic of operational consistency and keeping shoppers happy through predictability. And finally, the reality that all the operating manuals and templates of the past have been thrown right out the window. And we're going to continue to check in on our old friend Target as they navigate new leadership while continuing to serve as retail's most reliable source of drama.

So let's dive into the heat map and see what these stories reveal about where retail's headed next. And let's start with Target, because honestly, when do we not need to talk about Target these days? Michael Fiddelke, is officially in the CEO seat and he's jumping in head-first, without hitting the pause button.

But hey, that's supposed to be one of the big benefits of throwing the baton at an insider, right? Learning curves are for losers, and one of Fiddelke's first official moves is consolidating Target's chief merchandising officer role under one person, Cara Sylvester. That's actually a smart overdue move because when you split merchandising leadership, you risk fragmented vision, internal competition, and slower decision-making, none of which Target can afford right now. But what's interesting is that Sylvester's coming from the guest experience side of the business rather than traditional merchandising. Target's betting that customer insight and commercial instinct are more valuable right now than pure buying expertise. And that tells you everything about where they think their problems really lie. I like it.

Then, there are the 500 people being laid off across distribution centers and regional offices to create more in-store payroll. 500 positions sounds big until you spread it across nearly 2000 stores. Then the mat starts to get a little thin. Either way, improving in-store customer experience is one of Fiddelke's top priorities, and it should be because Target still has a real presentation problem.

We've all seen those viral videos of clothes piled up on floors, and some of us have experienced it firsthand, but it's blowing up years of brand investment and compromising key partnerships now and potentially in the future. More than that, shoppers are loyal to Target because they like shopping in Target stores.

The only reason Target has an online business is because Target customers are continuing their store-based relationship with Target online. And, at the end of the day, Target is still a destination shop for most consumers. Targets aren't on every corner, and their small-format game really never got going.

So getting those existing stores right is mission critical. Not just for store sales, but for Target's digital future, marketplace, and highly profitable ad business. But let's talk about their board expansion that happened just before the merch shift. Target expanded its board from 12 to 15 seats to squeeze in that new CEO and bring in a couple of reinforcements.

This is Target bringing in serious firepower to turn the ship around. They've added John Hoke from Nike and Steve Bratspies, whose name may sound familiar because he is ex-Walmart. Hoke's real value lies in his recent Nike experience as Chief Innovation Officer during a period of massive growth. And Target desperately needs to recapture its appeal to higher-income, less price-sensitive shoppers. You know, the ones that Walmart's been stealing?  Nike has a lot of those customers. Also, apparel remains critical for Target, and it's started to lose some authority there. Just last week, Walmart was crowing about its apparel business in its Q4 earnings call. Something we haven't heard from them in a long time.

Here's a fun fact. Hoke actually worked for the designer Michael Graves way back when, and my fellow retail history buffs might remember that Michael Graves' collaboration with Target paved the way for all the designer hookups that followed. But hopefully this isn't just nostalgia for a model that's long since played out. They need Hoke's innovation chops, not just his brand Rolodex.

Bratspies' hire reinforces once again that Walmart is a retail innovation and talent incubation leader. Walmart used to be where retail careers rode off into the sunset. Now it's a springboard to shiny new places, and that's a seismic shift. But here's the stark contrast that should worry Target. Target's reinforcing merchandising, marketing, and design expertise, otherwise known as their old playbook trifecta.

Walmart, on the other hand, is living in the space age. Promoting executives who are steeped in AI, digital platforms, advertising, and marketplace operations. Now, don't get me wrong, Target has to restore the core before lurching at the new, but Walmart's already boarded the rocket ship.

Now let's talk about something exciting, the upcycling of the mall. Most recently, the Westminster Mall in California. It's finally getting demolished to make room for housing and a hotel. But before we get all nostalgic, this really is a happy ending leading to a more productive new beginning. The numbers tell the story. About 1,200 malls still stand in the US, down from about 1,500 in 2005, but nearly half of mall redevelopments are mixed-use and they still feature some retail space.

So this is yet another "different not dead" retail story. But these days, when malls do die, they become warehouses, residential housing, delivery centers, community colleges, and healthcare facilities. That's a dizzyingly diverse departure from the past, and it shows that communities are using these assets to meet real local needs. But malls also usually sit on prime real estate with existing infrastructure in place. Roads, utilities, transit access...that's gold for developers because all the stuff that really matters is already on lock. It's very "build it, and they will come". So the malls that are thriving now and will thrive in the future, they're not trying to be 1980s shopping destinations. They're transforming into true lifestyle centers, mixing retail with dining, entertainment, fitness, healthcare, and community gathering spaces. Developers and tenants are creating Instagram-worthy moments in these spaces. Ones that Amazon just can't replicate.

The first enclosed mall in the US opened in 1956. It was the Southdale Center in Minneapolis. Fast forward about 15 years, and the Six Flags Mall opened in Arlington, Texas to great fanfare, and I'd like to think that my little self helped generate some of that buzz via my stunning performance in a local television commercial for Six Flags Mall that centered around Mother's Day.

I landed the gig with my brother and it took a few takes to make it a wrap, but that's understandable given the complex dialogue and banter we had to deliver. My brother teed up the action with, "There's more for your mother at Six Flags Mall," then I brought it home with, "Yeah. 68 stores with everything!" Boom, A star was born and the rest is history. Six Flags Mall was demolished around 2017, and I take absolutely no responsibility for its demise.

I've been getting a lot more questions about Costco lately, which actually makes sense because in the midst of chaos, confusion, and exhaustion, having a soft, reliable place to fall can feel really nice.

Yes, it's a great time to revisit beautifully boring Costco, but unfortunately, there's a tendency to nitpick when a retailer like Costco just seems to have everything in the bag. I've been getting questions about how Costco even makes money with its loss leader tactics and moderate margins, and even whether shoppers are getting tired of the model altogether.

Short answer? Absolutely not. Costco's membership fees account for 50 to 65% of total profit in 2024. Membership fees generated about $4.8 billion from over 137 million cardholders. That means Costco can afford those razor-thin product margins because the profit's already locked in through membership renewals.

But, going back to the nitpicking, I was asked whether Costco members are becoming dissatisfied with particular locations, picking apart different elements of the Costco experience, and it actually points to Costco's real magic. Members don't compare locations. They have their Costco and it's almost a tribal loyalty.

Shoppers will drive from far and wide to make pilgrimages to a particular store, so they're not shopping around. They're committed. And as part of that, they really don't have a lot of context, and that's a win for Costco. The worst Costco is still like the worst pizza, still pretty darn delicious. Costco is consistent where it counts. Kirkland bringing on the quality, predictable value, helpful staff... even the so-called "worst" Costcos deliver on these basic promises. And that $1.50 hotdog combo? That's been the price since 1985. Yes, Costco does lose money on it, but as a powerful loyalty generator, it keeps members coming back, and that drives traffic and creates goodwill. Altogether it translates to membership renewals that drive profits.

But let's take a pause to get out the champagne to celebrate the recent tariff overturn. It's great news for retail, but of course, it will take time for all of it to get worked out through the system. Not to mention the aftermath that could get really ugly, but either way, shoppers are giving the side eye to retailers that they think are taking advantage of all the confusion. But Costco, here again, has escaped a  lot of that skepticism just by being consistent. No games, no surge pricing... it's all so blissfully boring.

Let's shift to something I'm putting a spotlight on because it reveals new dynamics that will ripple across all of retail for years to come: how Gen Z has been shifting the restaurant landscape.

First of all, the Gen Z Age spectrum ranges from 13 to 28. That means you've got younger kids who still rely on their parents for transportation lumped in with an older cohort that might be planning families. Nothing Bundt Cakes is on an absolute roll right now that's probably driven by teens requesting those cakes for birthdays and special occasions.

But then you've got concepts like Longhorn Steakhouse and Texas Roadhouse that are riding high because Gen Z families make clear quality-for-value calculations. Longhorn is family-friendly with hearty, shareable portions at accessible prices. The same goes for Texas Roadhouse. So even though more upscale concepts are trying to up the value, they're still perceived as an expense account indulgence from the past.

7 Brew's success over Starbucks? That's all about service. 7 Brew's employees are incredibly well-trained, and 7 Brew's drive-through model drives efficiencies. You've got all these fast food chains right now trying to shrink or eliminate their dining areas, but they're still getting pushback that makes it impossible to implement chain-wide.

But 7 Brew had it baked in from the start. The expectations already set with customers and 7 Brew just makes everyone's day a little bit brighter. Employees treat customers like old friends, and that alone sets them apart from Starbucks, where a lot of the magic's been drained out over time as Starbucks scaled up.

First Watch is another ingenious concept for Gen Z. It plays perfectly into the brunch craze while offering a fun, affordable, multi-generational gathering space. The coffee, juice, and cocktail menu separat it from those old school breakfast joints. It's Instagram-worthy, wallet friendly, and social. So First Watch really has hit a Gen Z sweet spot.

So what do we know from all this? Gen Z gravitates toward brands that feel fresh, authentic, and aligned with their values, not necessarily corporate giants that coast on name recognition.

So let's get a checkup on regional grocery chains, particularly in the fresh category. I recently contributed to an industry white paper on how regionals have demonstrated a heck of a lot of resilience in the face of all of these headwinds buffeting retail.

You've got retailers like Walmart that can afford to treat groceries as a loss leader, high-efficiency hard discounters like Aldi that are doubling down on fresh, and even convenience stores pushing produce so they can woo those health conscious customers. Not to mention the massive consolidation that continues to happen in the industry as a whole.

So many of these regionals aren't surviving in spite of being regional, they're thriving because of it. HEB, Publix, Wegmans, Hy-Vee, and a host of others that enjoy deep loyalty in their backyards, all have leaned into their regional identities rather than chasing national scale, and that turns out to be a powerful differentiator when customers want their grocery store to reflect their community.

HEB is arguably at the top of the heap in that regard. Fiercely Texas, fiercely independent, and consistently ranked among the best grocers in the country. They've resisted acquisition pressure while building a supply chain that rivals national players. Publix' employee-owned model has created a genuine service culture that corporate chains really struggle to replicate.

Wegmans has built something close to a cult following through exceptional prepared foods and store experience. And Hy-Vee blows me away with its plant-based and organic sections filled with stuff that I can't even find at Whole Foods or online. And that includes awesome organic produce at a great price.

But, for all these guys, fresh is the ultimate battleground, and regional chains are uniquely positioned to win that battle. Fresh drives trip frequency and basket size like nothing else can. It sets quality expectations right when you walk in the door, and a beautifully executed produce department creates an emotional connection that algorithms just can't replicate.

But produce is also brutally unforgiving. One bad experience with wilted greens or bruised fruit can ruin a shopper's perception of the entire store. You either commit fully to fresh or you risk undermining everything behind it. It's a go-big-or-go-home category, and my hat is off to the regionals who are still rocking it.

Have you heard of Sukoshi? Well, if you haven't, you will soon. After about eight years of laying low up north, this Canadian Asian beauty house is ready to roll here in the US. They're planning 40 stores by year's end, and I was recently asked if Sukoshi has a chance or if it's just a flash in the pan. Here's my answer.

Despite Ulta and Sephora's dominance, and regardless of all the discounters, grocers, and online platforms trying to get a piece of the beauty pie, there's absolutely room for a compelling alternative. Sukoshi has a narrow, trend-right focus, Asian beauty, and that specificity is actually their superpower.

Being private and agile, they can sieze on those brand partnerships and exclusives that drive new interest, right when the brands are taking off, and they're also women-owned. Sukoshi is curating the best Asian brands, and they're brands that many North American shoppers aren't familiar with yet. So that discovery element is powerful, and Sukoshi has built the authority over several years to create assortments that go beyond trend cycles.

Big box retailers are definitely adding Asian beauty, but they're barely scratching the surface. Sukoshi offers over 200 Asian beauty brands and that's something you just can't replicate in a Target or CVS, or for that matter, at Sephora or Ulta. Sukoshi's evolution into a full-scale brand accelerator is the sprinkles on top. They're more than a retailer. They're helping beauty brands grow from niche discovery to national retail presence, and that's a powerful launchpad that creates genuine value for their brand partners. I think plenty of up-and-coming brands will choose Sukoshi's cool factor over getting lost on the shelves of the beauty giants. Either way, I'm bullish on Sukoshi's US expansion. 

So let's wrap up by talking about those flat December retail sales numbers that had everybody freaked out. Consumers and retailers were being hit with a tsunami of headwinds, all of the ones that we've been talking about. But the fact that spending held steady with all of that going on is actually pretty remarkable.

It's unrealistic to expect every year to be up, up, and away, and holding steady this particular year is an accomplishment in and of itself. The more important story was where consumers chose to spend. Consumers were gravitating toward value and necessity while pulling back on discretionary categories.

So we saw declines in clothing, electronics, and furniture, and that tells a very clear story. These are the categories that were the easiest to ignore, but it also confirmed what we were seeing all year: a deeply bifurcated consumer economy. You have higher-income households spending with confidence while middle and lower-income consumers were growing increasingly cautious.

That's will just continue, and that chasm is starting to turn into a canyon. And here again, Walmart's been winning by keeping a foothold on both ends of that spectrum. They're wooing higher-income shoppers with expanded online assortments and convenience, and hanging on to those value-based shoppers through strategic pricing on everyday essentials and affordable splurges.

So let's do a quick recap on what's working right now. First, picking a lane, then hitting the gas. Costco's unwavering consistency and impressive abstinence from pricing games, regional grocers leaning into local connections ,and Sukoshi blowing open a beauty gap. Legacy players and newcomers alike are creating power niches during one of the most challenging retail eras in history.

Second, securing the core before going for more. Target deserves credit for acknowledging that the store is still the core and that merchandising and brand integrity still matter for their business, but the clock is ticking and the market won't tolerate ponderous plays from Target. Third, tracking the shifts that will shape the future. The signals are there if your eyes are open. Gen Z is rewarding authentic service and genuine value. Doesn't have to be fancy. You just gotta keep it real. And malls are not dying, they're evolving into something far more useful to their communities. Asian beauty? It's not a fad. It's fundamentally reshaping the beauty business.

The companies that will thrive through the rest of 2026 and beyond see these shifts and adapt accordingly rather than trying to recapture past magic against an entirely different retail landscape.

Thanks for listening in today. I hope you enjoyed the episode and, if you did, please like, share, and subscribe. You can invite me to your organization or event to bring conversations like this to life in your spaces. That's what I do. B2B, coaching, training, and executive consulting. If it has to do with retail thought leadership, B2B, market positioning, and business development, it's probably something I can help you with. If you're interested in learning how we can work together, reach out to me at spieckermanretail.com or email team@spieckermanretail.com to book a discovery call. Until next time, keep speaking retail.