Target Deploys AI-Powered Shopping Tools Amid Consumer Spending Pressures

Target Details Consumer Strain and Unveils Its Chatbot Plans | PYMNTS.com

While inventory is tight heading into the fourth quarter, management said shoppers remain cautious and selective, creating an uncertain backdrop for the most important shopping period of the year. Net sales were 1.5% lower in the third quarter from a year ago, and comparable sales slipped 2.7%, according to a Wednesday (Nov. 19) press release. Comparable digital sales were up 2.4%. During a conference call with analysts, executives described a consumer who is still buying but doing so with a sharper focus on needs and value. "Guests are choiceful, stretching budgets and prioritizing value," Target Chief Commercial Officer Rick Gomez said during the call. Customers are concentrating their spending in categories like food, essentials and beauty, and they are seeking deals in discretionary categories, he said. Sentiment is at a three-year low due to concerns about jobs, affordability and tariffs. The themes are consistent with prior quarters, showing a shopper who remains emotionally motivated to celebrate the holidays but is intent on not overspending, he said. In his final earnings call, Target CEO Brian Cornell acknowledged the broader demand challenges. The company is focused on merchandising, experience and technology improvements designed to better anticipate what consumers want and deliver it more efficiently. These priorities are essential to getting the company "back to sustainable growth," he said during the call. Target Chief Financial Officer Jim Lee reaffirmed guidance for a low-single-digit decline in comparable sales, consistent with year-to-date performance. The company continues to see "a high degree of volatility" in weekly and monthly trends, including near-flat results in August and October but a notable pullback in September, he said during the call. The holiday mix is expected to be shaped by spending categories that have already shown resilience. Food and beverage delivered another quarter of growth, with beverages up nearly 7%. Discretionary categories remain uneven. Apparel comps were down 5%. There was nearly 10% comp growth in toys and double-digit gains in video games, music and sporting equipment. A key part of the company's growth strategy is deeper use of artificial intelligence and its partnerships with major platforms, including OpenAI. Target Chief Operating Officer Michael Fiddelke, who will succeed Cornell in the CEO spot, said during the call that Target is "leading in the next wave of digital engagement" through an initiative called conversational curation. The program allows guests to describe what they want, and OpenAI systems will provide personalized recommendations. Digital efforts extend beyond the OpenAI partnership. Target's same-day services grew more than 35% in the quarter. Its generative AI-powered gift finder assists holiday shoppers with broad and specific queries. Management also pointed to machine learning tools improving inventory flow and in-stock performance. Shares were down 0.6% in early trading Wednesday.

Retail tidings: Target adds more personalized AI tools for customers (TGT:NYSE)

Target Corporation (TGT) announced on Wednesday the introduction of new AI-powered digital tools aimed at creating a more seamless and personalized holiday shopping experience both online and in stores. As part of the enhanced AI rollout, the retailer introduced several new Target's personalized and streamlined AI features aim to enhance customer experience and could drive stronger holiday sales through greater engagement and conversion. Data shows that generative AI traffic converts 16% better with higher engagement and lower bounce rates, suggesting Target may see improved online conversions. The upgraded Store Mode acts as a personal in-store assistant, navigates aisles, helps locate products, and offers alternative fulfillment options if items are unavailable.

Target Turns to AI to Spruce Up Holiday Shopping | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. The new features, announced Wednesday (Nov. 12), include gift recommendations powered by artificial intelligence (AI), as well as store navigation assistance and shopping list scanning. "We know so many of our guests love shopping our stores with their phones in hand, and when they use the Target app in-store, their basket sizes are nearly 50% higher as they discover more of what they love," Cara Sylvester, chief guest experience officer, Target, said in a news release. "We're committed to making the shopping experience this year even more connected, personal and intuitive, with innovations that help guests discover the hottest items and Target products they love at a great deal. It's all about meeting them where they are, simplifying gift-giving and helping families focus more on the joy of the season." According to the release, Target is now offering AI-powered tech that lets shoppers find and purchase everything on their wish lists while also getting new inspiration. The "new, conversational" AI-powered Target Gift Finder allows shoppers to type in details about the gift recipient or occasion into the Gift Finder to get tailored recommendations. There is also the new List Scanner, which lets guests scan their handwritten lists in the Target app -- or scan holiday wish lists for their families -- to add items into their cart. Target is betting on convenience ahead of a holiday shopping season that could see consumers pulling back. The latest Holiday Spending Survey from The Conference Board, released earlier this week, shows that the average consumer plans to spend about $990 on holiday-related purchases this year. That's a 6.9% decrease from $1,063 in 2024 and is in line with spending plans from 2023. The downturn applies to both gift budgets, down 3.9%to $650, and non-gift items such as food and decorations, which fell by 12% to $340. After adjusting for inflation, these numbers are at multiyear lows, the board said Tuesday (Nov. 11). "Several years of relatively high inflation have raised price levels and squeezed consumers' wallets," Conference Board Senior Economist of Global Indicators Stephanie Guichard said in a news release.