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Target's AI Expansion Despite Failures
Source: futurism.com
Published on May 26, 2025
Updated on May 26, 2025
Target's AI Expansion Persists Despite Challenges
Target announced in late 2023 that it was integrating artificial intelligence to enhance the holiday shopping experience. This move, aligned with the release of OpenAI's ChatGPT, positioned Target as a leader in the "future of retail." However, the initiative has faced criticism, including a class action lawsuit alleging the use of facial recognition software for surveillance.
The lawsuit claims that a loss prevention manager accessed a customer's LinkedIn profile after she visited an Illinois Target store. Despite these controversies, Target has introduced a generative AI "Store Companion" to improve employee efficiency and Roundel, an AI-powered marketing platform.
Financial Performance and AI Initiatives
Two years after launching its AI initiatives, Target's first-quarter earnings fell short, with revenue dropping to $24.5 billion from the previous year. Total sales decreased by three percent, and in-store foot traffic declined. The company revised its 2025 financial forecast from positive to negative, leading to a stock drop.
Target attributed these issues to tariffs and boycotts but plans to leverage more AI to address them. The retailer aims to modernize operations and improve customer experiences through advanced AI systems.
Enterprise Acceleration Office
Following the disappointing earnings, Target established a "multi-year Enterprise Acceleration Office" led by COO Michael Fiddelke. This office aims to increase the company's agility and progress on its growth roadmap. Fiddelke emphasized the importance of boldly leveraging technology and AI during an earnings call.
Chief Information Officer Brett Craig highlighted AI's role in forecasting product demand and ensuring items remain in stock. He also noted that AI helps allocate inventory efficiently, allowing Target to respond to changing demand.
Customer Concerns and Future Outlook
Despite Target's AI ambitions, customers frequently complain about long wait times at self-checkouts, messy aisles, and empty shelves. It remains unclear how AI will address these issues effectively. However, Target is committed to integrating AI to enhance the overall shopping experience and drive future growth.