Target Partners with OpenAI to Deploy AI Tools and Reverse Sales Slump

Target announced a strategic partnership with OpenAI aimed at accelerating the retailer’s recovery from a recent sales slowdown by embedding advanced AI across its operations. The agreement will focus on deploying machine learning and generative AI tools to improve inventory accuracy, personalize marketing and promotions, optimize pricing and strengthen demand forecasting — areas executives say have direct impact on sales and margins.

While details of the commercial terms were not disclosed, Target will likely integrate OpenAI’s language and predictive models into both back-end systems and customer-facing channels. That could include AI-assisted merchandising decisions, more relevant online and in-store recommendations, chat-based customer service enhancements and faster replenishment cycles. The retailer has cited operational complexity and inventory mismatches as contributors to underperformance; AI-driven automation could reduce out-of-stocks and markdowns that erode revenue.

Investors and analysts will watch for measurable outcomes: revenue growth, inventory turns and margin stabilization. Target’s stock (ticker: TGT) has faced pressure amid softer consumer spending and heightened competition from e-commerce rivals. Executives have previously identified technology and supply-chain investments as levers to regain momentum, and this partnership represents an escalated bet on generative AI’s practical retail applications.

Risks remain. Integrating large AI models into legacy systems involves significant execution work, data governance and privacy considerations. Success depends on high-quality data, cross-functional change management and clear measurement frameworks to ensure AI initiatives translate into sales lifts rather than incremental costs.

Still, the alliance signals Target’s intent to use advanced technology to enhance the shopping experience and tighten operational efficiency. For shoppers, the near-term benefits may show up as more relevant promotions, faster online fulfillment and fewer stockouts. For investors, the pivotal question is whether these AI investments will deliver tangible improvements to top-line growth and profitability in the quarters ahead.

Target plans phased rollouts and pilot programs to assess effectiveness before broader deployment, suggesting a measured approach that balances ambition with operational pragmatism. Market observers will track pilot results and guidance updates for signs the strategy is beginning to work.