@OP TGT's aim has been to be on par with Walmart price-wise but they just can't compete. For as long as I've been working there (full disclosure: I don't understand the business-side well; so my opinion is just that); why keep trying to beat Walmart; why not just elevate your quality/quality-control/material-choices so that Guests notice the difference and are willing to spend more?
Anecdotal here: I don't go to Walmart for home decor or kitchenware. I go there for caulk or masking tape or cheap socks. BUT I have ALWAYS gone to TGT for beautiful home decor and items to furnish my home/kitchen spaces; NEVER to Walmart. I go to TGT because I am looking for items that would normally be found at C&B, Pottery Barn BUT out of my reach price-wise.
But since working there (PDD), in an effort to stay affordable, we paint items gold, then market them as "brass-finish", we cheapen materials to stay under costs (then are shocked when Guests say that they rust), we have items shatter in the microwave because we don't want to use high-quality glass; and then use faux wood everywhere we can: I can go on and on. Threshold/H&H items for the most part are aesthetically pleasing but so cheap-looking that I personally wouldn't want to buy them for myself anymore. I want items that will last a lot longer than a year; and am willing to then save up, and spend at C+B or Pottery Barn in an effort to get that; instead of replacing said items every year.
One last thing: who in he-l is buying seasonal throw pillows, or seasonal dinnerware sets? We keep pushing out a bunch of seasonal stuff that nobody in this economy is willing to buy. Stick to essential core items!!!