Target sales face multiple challenges ahead of its next earnings call on Aug. 20, but as the retailer figures out how to execute a turnaround, one potential candidate to become its next CEO sees artificial intelligence (AI) playing key roles.
Minneapolis-based Target has already launched major AI initiatives and shared how generative AI is being used for its Store Companion chatbot, as well as for assistance with inventory management. Looking ahead, the company wants to go further and has designated a team to advance the AI tools within the organization with key objectives in mind.
“As you heard from [Brian Cornell, president and CEO at Target], I’ll be leading a newly created acceleration office for the enterprise aimed at removing friction and enabling the team to make faster decisions in support of our growth,” said Michael Fiddelke, Target’s executive vice president and chief operating officer, during a May 21 call with investors.
Fiddelke is being considered as a possible successor to Cornell by Target’s board, the Wall Street Journal has since reported. In that context, his vision for AI’s role on Target’s path to growth is all the more interesting.
How does Target use AI?
“Through this office, I’ll partner with leaders across the organization to more boldly embrace and harness the power of technology and AI beyond what we are already deploying,” Fiddelke said in May. “As a natural extension of our roadmap for growth, our priority will be enabling more efficient and cost-effective ways to work.”
Notably, Target has already made significant bets on AI use at scale for its operations. In June 2024, it announced that it would provide its new Store Companion chatbot, powered by generative AI, to staff at almost 2,000 stores later that year.
Target provided Store Companion to its team members as an app on handheld devices. Use cases included answering questions about processes and procedures with instructions and coaching.
“Streamlining day-to-day tasks goes a long way with our team members and adds up to more time spent with guests and a better guest experience across the store,” said Jake Seaquist, a store director at one of the Target stores that was part of the chatbot pilot.
AI use extends to Target’s website as well, where the company announced it would use generative AI to summarize reviews and update product descriptions on more than 100,000 pages in 2024. Moreover, the company launched an enhanced, AI-enabled search experience for its site, displaying results that incorporate context such as themes and other details from conversational interactions.
Target recently rolled out an AI tool for advertisers as well, debuting Precision Plus for its Roundel retail media network. It was built to help clients prioritize and adjust ad placements on platforms such as Google, Meta and Pinterest, incorporating data from stated campaign goals and performance signals received over time.
Target’s demand forecasting and inventory planning
Even prior to OpenAI’s release of ChatGPT in 2022, Target had used other AI tools to assist with common issues that retailers face regarding demand forecasting, inventory planning and pricing.
In a 2023 blog entry, Brad Thompson, who was then senior vice president overseeing data sciences, and Meredith Jordan, vice president of product engineering at Target, shared that machine learning helped the company to get a better handle on its out-of-stock inventory.
To address the issue, Target created an internal tool called Inventory Ledger to track inventory changes across activities such as guest sales, replenishment, and order fulfillment at its stores.
“When we performed recent physical audits of our inventory, which we do once a year for all items in every store with some items counted more frequently, we discovered that half of the out-of-stocks were unknown to our systems,” the authors wrote.
Designed to give a systemwide assessment of inventory statuses, the new tool processed as many as 360,000 inventory transactions per second, handling 16,000 requests for inventory positions per second with an average load of 12,000 per second, they shared.
Ultimately, they said the result was to “know that we have fuller shelves,” in addition to being better prepared to serve shoppers.
Target web sales by year
Target is No. 5 in the Top 2000. The database is Digital Commerce 360’s ranking of North America’s online retailers by annual ecommerce sales. Target is also No. 80 in the Global Online Marketplaces Database, which ranks the 100 largest global marketplaces by third-party gross merchandise value (GMV). Digital Commerce 360 categorizes Target as a Mass Merchant.
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