Dive Brief:
- Target will invest in revamped store operations and new technology as it makes CX a priority in its pursuit of sales growth, COO and incoming CEO Michael Fiddelke said on a Q3 2025 earnings call Wednesday.
- The retailer is reducing the time spent on backroom tasks to let associates spend more time with customers, improving in-stock rates for top items, and reconfiguring individual stores’ roles to focus on in-store shoppers or digital order fulfillment, according to Fiddelke.
- Lower-traffic volume stores with large back rooms will handle more order fulfillment, with more labor hours dedicated to supporting filling digital orders, according to Fiddelke. Higher-traffic volume stores will handle less order fulfillment to free up associates’ time to interact with customers.
Dive Insight:
Fiddelke is making CX improvements one of the development pillars that could help Target return to sales growth as he prepares to take on the CEO role in February.
Comparable store sales dropped 3.8% year over year in the third quarter of 2025, according to a company earnings report. Net sales were down 1.5% year over year to $25.3 billion.
Target will invest $1 billion in the business in 2026 to support a return to growth, with a focus on supporting new stores and remodels, according to a press release.
Associates will play an important role in the retailer’s turnaround strategy. Earlier this month, the company introduced a policy mandating workers must smile, make eye contact, and greet or wave whenever a shopper comes within 10 feet, Bloomberg reported.
“A great guest experience means a lot of things, but it starts with a warm, friendly and helpful team in stores,” Fiddelke said on the earnings call. “We're making changes to give our team members more time to focus on what matters most, spending time helping our guests through enhanced digital tools.”
Digital tools are helping on the back end as well, according to Fiddelke. Target modernized its technology for tasks ranging from forecasting inventory orders and getting products on shelves with an “acute focus on those most frequently purchased items, where if we're out of stock, it hurts more if you're a guest and we've let you down.”
This led to a more than 1.5% year-on-year improvement in availability for the retailer’s 5,000 most frequently purchased items, which represent 30% of Target’s total unit sales, according to Fiddelke.
“We're reducing time devoted to backroom tasks through more efficient truck unloading and stocking,” Fiddelke said. “Every hour we save is being reinvested to allow more guest interaction with a focus on the friendliness and service that makes Target an elevated shopping experience.”
Comparable digital sales, which rose 2.4% year over year, were a bright spot for the company. Target is building on this growth with an AI-powered holiday gift finder and a ChatGPT partnership. Through the partnership, Target customers will be able to use ChatGPT for personalized recommendations and place orders for pickup or delivery.
