I'm guessing Target's calculus looks something like this:
There is a relatively tiny portion of the public who are actually paying attention, and they will be so angered about this that they'll stop shopping here. The rest will either like it or not give a flying fuck one way or the other.
Pretty much a wash, probably.
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I don't know if I can agree with your calculus there, I would think it looks more like this:
* There is a relatively large portion of the public that *might* take a large enough exception to this policy to curtail their shopping at Target -
BIG RISK
* This policy provides a special accommodation for a very tiny slice of the potential market (transgender individuals) who *might* increase their volume of business with Target -
SMALL REWARD
* Of those consumers that don't fall into the first two groups, some may applaud the move, most won't care one way or another but in either case it's not likely to alter the amount of business they do with Target. -
NO CHANGE
I can't for the life of me see where Target Management found a business upside in this policy and if I were a shareholder I'd be demanding that management explain in detail why this move made good business sense.
In any case Target is well within it's rights to implement this policy and those that are actively boycotting/petitioning Target are also well within their rights to do so, in fact this is the way society should work, it's completely voluntary (no interference from the State).