Retail giant Target is spending big on AI to pull itself out of a continuous sales decline and a siloed data landscape.

COO, and soon to be CEO, Michael Fiddelke said in an earnings call Wednesday the company had purchased 10,000 new licenses for AI products in the last quarter alone and promised more were coming.

He said Target’s biggest challenges were legacy technology, “manual work that can be automated, unclear accountabilities, slow decision-making, siloed goals, and a lack of access to quality data."

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The commitment came as Target recorded a year-on-year (YoY) slump in sales for a third consecutive quarter, though the 0.9% decrease to $25.2 billion in Q2 marked an improvement on the 2.8% drop seen in Q1.

Net earnings have also dropped YoY, from $1.1 billion in Q2 24 to $935 million in Q2 25. The company has faced tariff and post-pandemic overstocking complications in recent years, and said technology “will need to play an even stronger role” in operations to turn things around.

Two decade Target veteran Fiddelke will step up to the CEO role in February 2026 when Brian Cornell steps down. The selection of a deep insider as Cornell's replacement was poorly received by analysts, with shares dropping double figures following the news.

During the Q2 call, Fiddelke promised to bring changes "large and small" to the business across technology, data and team structures, all to further a "relentless" pursuit of growth.

AI Acceleration

The company recorded $1.9 billion in capital expenditure for the year so far, focussed on supply chain technology, and new and remodeled stores.

In May, Fiddelke formed an “acceleration office” aimed at using AI to reduce “friction” in Target’s operations and find “more efficient and cost-effective ways to work.”

On the customer side, Target has offered a “Store Companion” AI chatbot since June 2024 and uses AI to summarise reviews and product descriptions on its website.

It’s not alone, retail businesses around the world have turned to AI to reinvigorate digital offerings and streamline operations, with Walmart building its own Wally AI tool.

The Target competitor said earlier this year the tool was getting to the “root cause” of its issues, highlighting stock issues faster than employees had been able to.

In the UK, supermarket chain Sainsbury’s put AI and machine learning at the centre of its £1 billion savings drive, using the tech for tasks such as surfacing data for financial projections.

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