Target bets on AI to drive enterprise strategy and retail operations

The retailer, with a market capitalization of more than $100 billion, is known for its style, design and curated merchandise and has about 5,500 employees in India now

Target is reinventing its enterprise strategy using artificial intelligence (AI) and adopting a shift in its technology architecture to support AI transformation, its chief information officer said, as the US retailer integrates the technology deeper in its operations to adapt to the shifting needs of customers.

 

A significant part of that transformation happens out of its centre in Bengaluru, which was set up over two decades ago. It now undertakes complex tasks such as store design and remodelling, improving packaging of in-house brands to make it more appealing, solving last-mile connectivity problems, or elevating customer experience with agentic AI.

 

The retailer, with a market capitalisation of over $100 billion, is known for its style, design and curated merchandise and has about 5,500 employees in India now.

 

“The first (strategy) is powering the enterprise strategy with AI. The second is technology and an architectural shift to support AI transformation. The third is ways of working, which is significant in every discipline. All three come into play as we think of our enterprise priorities -- understanding how AI is enabling style and design and how AI is elevating the guest experience,” Prat Vemana, executive vice president, chief information and product officer, told Business Standard recently.

 

For example, Target has a design team in the country that does half of all of its new store designs and 80 per cent of the remodels though they have not been to the US and walked through the stores. It also has a Brand Design Lab team, that designs packaging for some of its owned brands.

 

“When you walk into a store and you’re trying to decide between products, packaging can influence the decision you make. A lot of the digital experience that guests experience on target.com is also powered by the team here,” added Andrea Zimmerman, president at Target India.

 

AI is also changing the back end of retail that include supplier onboarding and solving the last-mile connectivity problem, the most complex thing to solve in the retail supply chain. Onboarding supplier means background verification, financial health, industry credibility, product fit and compliance with Target’s standards. The company has now built a multi-agent system, which compresses a month-long vetting process to just three hours. While the foundational platform for thus was built in the US, the responsibility has now spread across to India as well.

 

Similarly, when it comes to merchandising, Vemana said the decisions about what to buy, how much to buy, when to buy, which stores or channels to buy from or even what stores should the merchandise go to are all powered by AI.

 

“Where those solutions are developed and where the decisions are made need not be the same location. A lot of work in deciding what to buy is powered by our team here in Bengaluru. However, the actual merchants and the designers are in Minneapolis. So, in a way, I think, when you take merchandising authority, we lean in heavily to apply science and AI everywhere and depending on which aspect of the portfolio you’re looking at, the centre of gravity may shift between Bengaluru and Minneapolis,” Vemana said. 

 

Under Chief Executive Officer Michael Fiddelke, Target plans to spend an additional $2 billion this year on new ??stores, remodels, and AI initiatives.