What Plans Does Target’s New CEO Have for Store Revival?

AI is everywhere, as are CEO opinions on the matter. Leaders are deciding to what extent it will change the dynamics of their company across operations, decision-making and employee experience.

In his office in Minneapolis, Minnesota, Target’s incoming CEO and current Chief Operating Officer Michael Fiddelke is making the decision to incorporate AI at the retail firm, but not allow it to erode the brand experience.

Target has announced its betting billions on stories, from remodels to upgraded tech, part of its strategy to overcome a period of decreased sales.

This includes spending roughly US$5bn in capital spending next year, which the company said will “support new stores and remodels, enhancements to the store experience and advancements in technology and digital fulfilment capabilities”, and an additional US$1bn will be invested into the business.

Increased investment 

Aiming to work through weaker traffic, Target will also lean into categories that are still growing, including beauty which is outperforming other areas on the shop floor.

On a call with analysts on 19 November discussing Target’s disappointing quarterly earnings, Michael said the investment will support changes to “key floor pads throughout the store, which will accelerate both our merchandising authority and our experience” - according to a report by Retail Dive.

The push includes AI to speed product development and marketing, synthetic audiences to test campaigns and a ChatGPT-powered beta to simplify multi-item purchases.

According to Retail Dive, the CEO said this will “simulate real consumer populations to preview how different groups could respond to campaigns and products before they ever launch."

On the call, Chief Commercial Officer Rick Gomez said Target will make some changes to its product in the home category in addition to changing the store experience to “facilitate more discovery”.

Michael has expressed his disappointment in the company’s Q3 results as net sales and comparable company analysis (comps) both declined.

Targets results are as follows:

• Net sales dropped 1.5% year-over-year to US$25.3bn
• Comparable sales decreased 2.7%
• Merchandise sales decreased 1.9%
• Store comps dropped 3.8%, partly offset by digital sales growth

Leading store comebacks

Gen Z customers could be the driver of returning fortunes for Target's stores. The CEO of AS Watson Group CEO Malina Ngai told audiences at the Fortune Innovation Forum that younger customers are returning to real-world stores for touch consultation and community.

According to Fortune, she said that this is particularly in the beauty department, which validates the firm’s investment in stores that online retail can’t compete with.

Discussing the Hong Kong-based brand she leads, Malina told Fortune that US retailers can benefit from the footfall that is seen with young people in Southeast Asian beauty stores: “For younger customers, they want to be in the store, they want to get consultancy, they want to be able to touch the product - and this is what we can offer.”

Top priorities as new CEO

Michael was announced as the CEO designate on 20 August and will be taking the helm on 1 February 2026.

Taking over from current CEO Brian Cornell, he will transition into the role of Executive Chair of the Board.

In an interview with CNBC last month at the Minneapolis headquarters, Michael shared his three key priorities as he prepares to step into the role: regaining Target’s reputation for style and design, providing a more consistent customer experience and using technology to speed along the business.

He said that improving its merchandise, nicknamed “Tarzhay”, “is a critical first priority for me”.

“When we lead with style and design,” Michael added, “when our guests can walk into a Target store or scroll through the app and find that stylish, unique thing that ideally they could only find at Target, that’s at an unexpected value, that’s when we’re at our best.”

Nearly a third of its annual sales came from the festive quarter in 2024, so this next quarter will be a test to see how efforts to refresh the company will fare.