Target: Streamlined Checkout and GenAI Chatbot Improve in-Store Experience

A streamlined checkout experience and the deployment of generative artificial intelligence-powered handheld devices for employees have improved the in-store experience at Target, the retailer said Wednesday (Aug. 21).

Target saw improvement in the in-store checkout experience during the second quarter after streamlining self-checkout and ensuring adequate staffing in full-service lanes, Target Chief Operating Officer and Chief Financial Officer Michael Fiddelke said Wednesday during the company’s quarterly earnings call.

“With all of these changes, we’ve seen a continued substantial improvement in our Net Promoter Scores regarding the purchasing experience, with scores related to wait times and interactions at checkout the strongest we’ve seen in six years,” Fiddelke said on the call.

Target also completed the rollout of its generative AI-powered handheld devices for employees. These devices answer common questions and share best practices, Fiddelke said. Employees have used the technology more than 50,000 times, and they received their answers and completed their chat with the AI assistant in less than a minute, on average.

“We’ll continue to refine this tool over time based on feedback from our team, but many are already telling us that it’s enhanced their everyday work experience, making it easier and faster for them to help our guests,” Fiddelke said during the call.

“In addition, leaders in our stores are telling us they expect this new tool will be particularly helpful as we bring on new and seasonal team members in advance of this year’s holiday season, helping them to become more productive, more quickly than in the past,” he said on the call.

During the call, Target executives reported that consumers are responding favorably to the company’s latest initiatives in pricing, digital services and loyalty programs as they seek value, convenience and newness.

These enhanced offerings contributed year-over-year growth of 2% in comparable sales and 3% in traffic during the second quarter, with the sales growth being at the top of the retailer’s expectations, Target said in a Wednesday earnings release.

“In an environment where consumers continue to make meaningful trade-offs, our Q2 results demonstrate the power that comes from the right combination of newness, seasonal relevance and compelling value,” Target Chair and CEO Brian Cornell said during the call.

The second-quarter growth was driven entirely by traffic, which in turn was driven by several guest-focused initiatives Target announced in March, Cornell said.

For one thing, the retailer enhanced its digital experience. This contributed to single-digit growth in its digital comparable sales in the second quarter and low-teens growth in two of its same-day services: Drive Up and Target Circle 360, which offers same-day delivery.

“Same-day services now account for more than two-thirds of our digital sales,” Cornell said on the call, attributing the growth to consumers seeking convenience.

Consumers also responded to Target’s newest value-focused offerings, Cornell said. These initiatives include a reduction of prices on 5,000 frequently purchased items in many markets during the summer, and a relaunch of the Target Circle loyalty platform in the first quarter.

During the second quarter, 2 million new members joined Target Circle, adding to the 100 million members the loyalty program already had.

“Beyond the direct benefit of guest engagement with the platform, Target Circle also helps us gain deep consumer insights, allowing us to extend more personal, customized offers through our Roundel advertising business,” Cornell said during the call.

In terms of product categories, Target saw trends strengthen across the board. Both discretionary categories like apparel and beauty saw a rise in comparable sales, as did essential categories like food and beverage, Cornell said. Executives attributed the growth of both apparel and beauty to the newness of the company’s offerings.

Target Chief Commercial Officer Rick Gomez said during the call that while American families are still under economic pressure, and the economic data is still mixed, they remain willing and able to spend.

“Yes, they’re still being choiceful; yes, they’re budget conscious; and, yes, they’re hunting for deals and everyday value, but they’re also willing to shop when they find that right combination of fashion and newness at the right price,” Gomez said.

Looking ahead, Target expects to see comparable sales growth of 0% to 2% during the third quarter, according to the earnings release.

“As we continue to survey consumers and monitor the external environment, our view remains largely the same as we’ve been sharing for some time: Consumers have shown remarkable resilience in the face of multiple challenges over the last several years, and they remain resilient today,” Cornell said during the call. “Given the significant headwinds they face with inflation over the last several years, consumers continue to focus on value as they work hard to manage their household budgets.”