Dive Brief:
- Target is accelerating its investments in technology, including AI, as part of a $2 billion investment to drive growth, executives said Tuesday during an earnings call for the fourth quarter of the company's 2025 fiscal year.
- “With robust capital investments in both our infrastructure and technology, we expect to further boost productivity and create additional fuel for our business,” CFO Jim Lee said during the call.
- The company will add an additional $1 billion to its capital expenditures for a total of $5 billion in 2026, plus $1 billion in operational expenses to support customer experience and accelerate technology adoption.
Dive Insight:
Target is adjusting its strategy to counter a streak of poor sales, as shifting customer expectations and economic uncertainty test the company's ability to turn the ship around.
Led by CEO Michael Fiddelke — the former COO who took the reins at the retail giant in February and ushered in several key C-suite changes — the company expects technology investments such as AI to help improve its operations and customer retention efforts.
“We know those tech investments pay off with stronger experience, whether that’s digital or in store, when we’re setting up our team to free up tasks so that they can support our guests even more,” said Fiddelke.
Target saw its net sales for the full fiscal year decrease 1.7% to $104.8 billion. The drop reflected a 2.6% decrease in comparable sales, a key metric in the retail industry. But the company is expecting a turnaround, as it forecasted net sales to grow around 2% in the next fiscal year.
The company has been working to deploy data science, AI and automation internally for years. Chief Information and Product Officer Prat Vemana, who joined the company in 2022 and took his current title last year, has led the company's recent efforts to roll out generative AI capabilities.
In 2024, the company introduced Store Companion, a generative AI chatbot to help associates get answers to on-the-job questions, assist with employee training and store management. In November, the retailer was among the first companies to launch a shopping app within ChatGPT, letting customers get personalized shopping suggestions.
But Target is not alone in its pursuit for AI-fueled operations, as other industry leaders rush toward wider deployment of AI.
Walmart declared 2026 to be a year of transformation after previous deployments of agentic AI. The company last summer streamlined its agent lineup into four “super agents,” one of which focused on customer support.
