Target invests $2 billion in AI, store expansions, and staffing

We might be heading back to peak “Tarzhay.”

Target is going into hyperdrive in a bid for growth after a brutal few years marked by an uncertain economy, stubbornly high prices, and increased competition. After another quarter of declining revenue, the big-box retailer announced it is investing $2 billion this year (including $1 billion for incremental operating investment and over $1 billion increase in capital expenditures) to enhance everything from the store experience to payroll and AI capabilities.

According to a company memo, Target is breaking up its investments into four “growth priorities” to service its ideal customer profile: “busy families.” It includes:

• Merchandise authority: setting trends with a varied and expansive assortment of items
• Guest experience: investing more in digital discovery and in-store experiences
• Accelerated technology: investing in tools to help teams function better and to create more personalized experiences
• Strengthened teams and communities: investing in training and career growth

Target’s $1 billion operating investment will focus on in-store upgrades, including enhanced displays and updated floor plans. It will also include “hundreds of millions of dollars” for store payroll and training, and more spending on brand marketing and new technology like AI. With its store upgrades, Target will be introducing its Target Beauty Studio, which offers premium brands and speciality services. The initiative comes after Target ended its partnership with Ulta Beauty last year.

Aiming for growth: Target’s investments are part of its strategy to halt declining revenue. In its fiscal fourth quarter earnings report, Target reported revenue of $30.45 billion, versus an expected $30.48 billion. Forward-looking statements were a reason for optimism, however, as Target said it expects net sales to rise 2% in the current fiscal year. Giving a statement after his first earnings report at the helm, CEO Michael Fiddelke struck an optimistic tone.

“This new chapter of growth at Target is defined by clear choices and rooted in a deeper understanding of our unique lane in retail, the guests we serve, and the areas where we’re distinctly positioned to win,” said Fiddelke in a statement.