November 20, 2025
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Will Target and ChatGPT’s Team-Up Actually Improve the Retailer’s Fortunes?
Following three consecutive quarters of same-store sales declines despite being engaged in a significant turnaround effort, Target recently announced two major pillars of its ongoing plan to right the ship: a further $1 billion in capital expenditures (in addition to the $5 billion already laid out for 2026) next year — aimed at store remodels, new locations, and digital fulfillment and tech enhancements — and perhaps more interestingly, a partnership with OpenAI’s ChatGPT model.
After signaling the potential capabilities in October, a Nov. 19 OpenAI press release explained further details, drilling down into promises based on improving operations for vendors and and team members, as well as offering a more frictionless experience for Target shoppers.
“A big part of the AI transformation is happening inside enterprises, and Target is a great example of what that shift looks like when it’s done with ambition and speed,” said Fidji Simo, CEO of Applications for OpenAI.
“We’re excited to work with Target as they weave intelligence throughout their business to create useful and joyful experiences for their customers and their employees,” Simo added.
As Target sees AI solutions rolled out through the retailer’s headquarters and now serving 18,000 employees, a number of chatbot-adjacent functionalities were underscored as being vital to smooth day-to-day operations.
- Agent Assist and Store Companion: These Target-based app tools aim to help workers in service centers and physical stores assist customers with ease, with relevant product information and support assists being on-call. Beyond Q&A duties, these two agentic apps are able to conduct price matches, initiate the returns process, and deliver back-and-forth chat responses without wait times.
- Shopping Assistant and Gift Finder: A simplified pair of interfaces that act as a personal shopper, giving casual and conversational recommendations to aid in browsing while also putting forth customized product suggestions on request. Interests, age, occasion, and other particulars of a query are all considered and handled for Target by these AI tools.
- Guest Assist and JOY solutions: Talking to guests and Target vendors alike, JOY is trained on 3,000-plus FAQs and is specifically aimed at the latter category. In sum, this pair fields inquiries while deferring to a human specialist upon request.
Target Also Nests Itself Inside ChatGPT, Making a Play for Casual Purchases Through the AI Interface
At least some of Target’s play appears to logically rest at being one of the many major retail partners to buy into the much-vaunted prediction of ChatGPT-driven consumer spend — although most of the press release focuses on customer-initiated interactions with the specific Target app within the ChatGPT ecosystem.
That shopper-facing Target app is slated for release next week, with accounts being linked to allow the building of baskets, fresh food purchases, curated browsing experiences, and fulfillment options. An example was given of a hypothetical Target shopper asking for help in planning a movie night, with appropriate items — blankets, candles, tasty snacks, and even slippers — being instantly picked and provided as purchase options to the questioner.
“At Target, everything starts with the guest, and that means meeting them wherever they are , including emerging spaces like ChatGPT, where millions of consumers visit,” said Prat Vemana, EVP and chief information and product officer for Target.
“We’re proud to be one of the first retailers bringing shopping into this new channel, partnering with OpenAI to make discovery through the Target app in ChatGPT as easy and joyful as browsing our aisles. Our goal is simple: make every interaction feel as natural, helpful and inspiring as chatting with a friend,” Vemana added.
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Discussion Questions
Will the collaboration between Target and OpenAI actually produce meaningful sales and service improvements for Target? Why or why not?
Is Target too focused on tech improvements, spending the right amount of attention and capital on this infrastructure, or not spending enough?
With most major retailers making moves to partner with ChatGPT, how can any one company or brand eke out an edge in terms of differentiation?
Poll
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No, it won’t improve Target’s fortunes. And why would it? First, Target’s currently problems stem from operational sloppiness and a lack of a clear position; they do not stem from a lack of AI-enabled commerce. Second, while it will become more significant and is an important channel for the future, AI-driven commerce is currently a very small proportion of overall sales. So, this is not a bad thing for Target to do, but it’s not the solution to their woes.
No. There is nothing in this idea which can make a significant different in Target’s “fortunes.” Instead, it is very, very concerning. Rather than focus on doing what matters in their business, they are wasting time distracted by the shiny bauble of AI? I think we’ve seen this before in the years Macy’s wasted distracted by Amazon competition and failing to build strength in their stores. This is an incredibly sad and disappointing story.
What good are AI results if something isn’t in the store when you want to buy it?
(Let’s get AI’s opinion on this: Great question. Short answer: not always, but yes, a lot of people do run into out-of-stock issues at Target — and there are several reasons why. )
Anyway, at this point most anything AI is ‘table stakes’ – useful or not – rather than some kind of competitive advantage.
It is possible to overinvest in technology at the expense of other crucial areas such as customer service and product quality. In addition, if the technology investments do not yield the expected returns, they could place a strain on the company’s financial resources and affect its overall profitability. In addition, rapid technological changes might make certain investments obsolete quickly, leading to a waste of resources.
The skeptics are right: Target’s issues are operational sloppiness, unclear positioning, and leadership transition; it’s not the lack of AI integration. But here’s the strategic trap: AI agents can only reward what’s discoverable. If Target’s inventory isn’t accessible via ChatGPT, it becomes invisible when consumers shop through AI agents. You can’t compete on retail excellence if you’re not in the consideration set. So, Target is following Walmart’s October playbook: build proprietary tools while hedging through ChatGPT integration. Both retailers are hedging on whether platform or consumer-controlled agents will dominate. Retailers building walled-garden AI agents to protect inventory from competitive comparison is defensive positioning disguised as innovation. Target needs to integrate with ChatGPT for strategic insurance, but it cannot confuse distribution channel access with solving operational execution, store standards, or competitive positioning.
Target’s move here feels like a reasonable experiment rather than a guaranteed inflection point. Partnering with OpenAI may be a move to stay in the game of modern retail.
Target is already in the middle of a multi-year remodel and fulfillment upgrade, so adding a high-visibility AI partnership feels more like signaling future direction than shifting the fundamentals. As long as the AI stack is isolated from the core commerce systems and the operational plumbing continues to improve, the move fits into a broader modernization effort.
As for differentiation, simply “using ChatGPT” won’t set any retailer apart. The real advantage will come when the experiences feel purpose-built rather than generic. The execution of the right model will be differentiator.
Target has a lot of operational and merchandising issues to work on first and foremost. They have lost the value of the customer experience. While AI commerce could be a future state, it doesn’t make sense at the present time.
The tendency to apply a technology solution (AI/Tech) before fully diagnosing and committing to fixing the fundamental business problem.
- AI tackles symptoms, not the root cause. Tools improve efficiency and reduce friction, but they do not fix the main problem.
- The core issue requires a retail solution first. Target’s fundamental need is to improve its product mix and value to attract cautious consumers. Technology is a poor substitute for a compelling product.
- AI investment risks focusing on process over product. Making it easier to buy a flawed product won’t boost revenue. This strategy prioritizes fixing the shopping method over fixing what’s being sold.
- Layoffs show the true fix is internal agility. The corporate cuts aim to speed up merchandising and decision-making. Target must solve its internal delays before adding external tech solutions.
- Success depends on AI fixing the product itself. The AI must prove it can transform product design and forecasting, not just customer service, to bring better goods to market faster.
ChatGPT is a tool. If the products aren’t there for it to work with, results will not be maximized.
Just the fact that Target suggests AI will solve some of its problems is everything you must know about Target’s issues. Their management is oblivious to running a retail organization.
Target’s collaboration with OpenAI is necessary to stay competitive and relevant, and bolster the retailer’s all-channel infrastructure. ChatGPT attracts 800 million weekly average users, so having a presence there is non-negotiable. It will help Target improve its sales and service by investing in modernization and personalized retail solutions that customers have come to expect.
My skepticism runs deep, but I am in Target all the time anyway. So when it’s available, I will download the app and check it out. I love the ability to do homework, research, queries, etc., while sitting at home on the couch. Then I love the experience of being in the store. I’m having a hard time getting used to the idea of being glued to my phone while in the store. I know…”Get over it, boomer.”
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No, it won’t improve Target’s fortunes. And why would it? First, Target’s currently problems stem from operational sloppiness and a lack of a clear position; they do not stem from a lack of AI-enabled commerce. Second, while it will become more significant and is an important channel for the future, AI-driven commerce is currently a very small proportion of overall sales. So, this is not a bad thing for Target to do, but it’s not the solution to their woes.
No. There is nothing in this idea which can make a significant different in Target’s “fortunes.” Instead, it is very, very concerning. Rather than focus on doing what matters in their business, they are wasting time distracted by the shiny bauble of AI? I think we’ve seen this before in the years Macy’s wasted distracted by Amazon competition and failing to build strength in their stores. This is an incredibly sad and disappointing story.
What good are AI results if something isn’t in the store when you want to buy it?
(Let’s get AI’s opinion on this: Great question. Short answer: not always, but yes, a lot of people do run into out-of-stock issues at Target — and there are several reasons why. )
Anyway, at this point most anything AI is ‘table stakes’ – useful or not – rather than some kind of competitive advantage.
It is possible to overinvest in technology at the expense of other crucial areas such as customer service and product quality. In addition, if the technology investments do not yield the expected returns, they could place a strain on the company’s financial resources and affect its overall profitability. In addition, rapid technological changes might make certain investments obsolete quickly, leading to a waste of resources.
The skeptics are right: Target’s issues are operational sloppiness, unclear positioning, and leadership transition; it’s not the lack of AI integration. But here’s the strategic trap: AI agents can only reward what’s discoverable. If Target’s inventory isn’t accessible via ChatGPT, it becomes invisible when consumers shop through AI agents. You can’t compete on retail excellence if you’re not in the consideration set. So, Target is following Walmart’s October playbook: build proprietary tools while hedging through ChatGPT integration. Both retailers are hedging on whether platform or consumer-controlled agents will dominate. Retailers building walled-garden AI agents to protect inventory from competitive comparison is defensive positioning disguised as innovation. Target needs to integrate with ChatGPT for strategic insurance, but it cannot confuse distribution channel access with solving operational execution, store standards, or competitive positioning.
Target’s move here feels like a reasonable experiment rather than a guaranteed inflection point. Partnering with OpenAI may be a move to stay in the game of modern retail.
Target is already in the middle of a multi-year remodel and fulfillment upgrade, so adding a high-visibility AI partnership feels more like signaling future direction than shifting the fundamentals. As long as the AI stack is isolated from the core commerce systems and the operational plumbing continues to improve, the move fits into a broader modernization effort.
As for differentiation, simply “using ChatGPT” won’t set any retailer apart. The real advantage will come when the experiences feel purpose-built rather than generic. The execution of the right model will be differentiator.
Target has a lot of operational and merchandising issues to work on first and foremost. They have lost the value of the customer experience. While AI commerce could be a future state, it doesn’t make sense at the present time.
The tendency to apply a technology solution (AI/Tech) before fully diagnosing and committing to fixing the fundamental business problem.
ChatGPT is a tool. If the products aren’t there for it to work with, results will not be maximized.
Just the fact that Target suggests AI will solve some of its problems is everything you must know about Target’s issues. Their management is oblivious to running a retail organization.
Target’s collaboration with OpenAI is necessary to stay competitive and relevant, and bolster the retailer’s all-channel infrastructure. ChatGPT attracts 800 million weekly average users, so having a presence there is non-negotiable. It will help Target improve its sales and service by investing in modernization and personalized retail solutions that customers have come to expect.
My skepticism runs deep, but I am in Target all the time anyway. So when it’s available, I will download the app and check it out. I love the ability to do homework, research, queries, etc., while sitting at home on the couch. Then I love the experience of being in the store. I’m having a hard time getting used to the idea of being glued to my phone while in the store. I know…”Get over it, boomer.”