Target’s Tech Chief Has a Central Role in the Retailer’s Turnaround Plan

Prat Vemana, Target’s chief information and product officer, stated that improved technology is a central theme in the retailer’s recovery plan, following several years of decelerated sales. This year, the company is investing $6 billion into its stores, workforce, and technology to reverse the trend.

Comparable sales have declined in 11 of the last 13 quarters. Vemana’s primary focus includes merchandising and demand forecasting.

For merchandising, Target is developing "Target Trend Brain," an AI system designed to assist designers in identifying trending colors, patterns, and cuts by analyzing runway shows, social media, and written reports. Designers can also use natural language prompts to generate preliminary design versions.

Vemana noted that tasks that previously took weeks can now be completed in hours.

Regarding forecasting, seasonal and trendy items present a greater challenge than everyday staples. Algorithms effective for products like Cheerios do not directly apply to new apparel lines, and Target’s tech team is concentrating on addressing this gap.

Target is also an early adopter of agentic commerce, integrating its systems to enable direct purchases through ChatGPT and Google’s Gemini. The retailer is running advertisements on ChatGPT and ensuring that external AI shopping agents can process purchases on its website.

Vemana emphasized his preference for early adoption and learning over waiting for trends to fully mature. The retail sector as a whole is moving in a similar direction, with a Gartner survey indicating that nearly two-thirds of CIOs plan to invest in AI and machine learning this year. Companies like Walmart, Kroger, and Home Depot have made comparable investments due to competitive pressures from Amazon.

Technology, however, is not a complete solution. Target’s merchandising team acknowledged that the company had shifted towards a more generic product assortment, while customers expected bolder, trend-driven options.

Apparel and home goods constitute approximately 30% of sales, and analysts at TD Cowen believe that restoring confidence in these categories is crucial for customer retention.

CEO Michael Fiddelke reported positive sales in February, marking the first encouraging sign after an extended period of declines. The upcoming earnings report, anticipated in late May, will reveal the extent of the recovery.