The company expects rapid growth in its retail media network, Roundel, and its Target+ marketplace, which will help increase its operating income margin rate. Target CFO Jim Lee said this measure of profitability has the ability to grow more quickly than sales over the next few years. The company projects the operating income margin will grow its operating margin rate in 2026 by about 20 more basis points than last year’s rate of 4.6%.

“We often get the question of whether we believe operating margin rates can get back to pre-pandemic levels,” Lee said. Target’s operating income margin was at 6% in 2019, according to the company’s financial filings. “The answer to that question is a definitive yes.”

But unlike its merchandising or store operations, Target doesn’t appear to see anything fundamentally wrong with how it’s approaching e-commerce, its third-party marketplace or its advertising.

“We’ll continue the path of constant iteration,” Sarah Travis, chief digital and revenue officer for Target, told Modern Retail. She oversees the company’s website, app and retail media network. “[We have a] continued focus on discovery, content and newness, and bringing that brand to life in really unique ways that only Target can do.”

One of the key areas in which Target has been testing and learning is agentic commerce. During the last holiday season, Target launched an app within ChatGPT that lets shoppers ask for ideas, build multi-item baskets, shop for fresh food and check out using their Target accounts. In January, the company announced it would launch the ability for customers to buy from Target in Google Gemini through Google’s Universal Commerce Protocol.

“[We have a] continued focus on agentic, both off-property … and within our ecosystem,” Travis said. “We’re doing a ton of testing — both guest-facing as well as internally — to [pinpoint] the right experience with it within the platform, and then we’re just making it as easy as possible. The more we can just make it ‘click, boom, buy,’ we will focus on that.”

Like executives at Walmart, Travis and her team are taking an open approach to artificial intelligence. That includes partnering with tech companies to enable shopping through AI platforms as well as building in-house AI features and tools.

“We’re big enough to build and smart enough to partner, so where we can lean in and build independently, we will do that; and where we see that there is a third party or a partner that has tech capabilities that we can lean into, we’ll do that,” Travis said. “With the examples of OpenAI and Google, we see both of them playing really important roles in where agentic commerce is going, and so, where we can step in and work closely with them to help shape that, we’re going to do it.”

Similarly, Best Buy CEO Corie Barry said in an earnings call today that the consumer technology retailer would partner with OpenAI to display its product catalog in ChatGPT and in advertising, and that it would work with Google on its Universal Commerce Protocol.

In retail media, Target executives have said they see a path for Roundel to double in size over the next few years. Travis said the company sees advertising services that touch its website, app and stores as the foundation of Roundel, but that its off-site reach (media purchased by Target on other websites) also sets it apart. According to her, 35% of Target’s retail media revenue comes from off-site. That not only drives ad revenue for Target, but it can also attract more visits to its website, Travis said.

“We were actually one of the very first retailers to grow and build a retail media network, and we have made significant investments over the course of the past several years into the program, into the platform, into the technology,” Travis said. “We feel really good about our differentiated position. … The Circle loyalty program is the foundation of that — our data, our brand.”

Also on the advertising front, she said the company has more of an opportunity to lean into its brand, storytelling and creativity, as it now has “more of a stake in the ground and more firm footing around who we are as a retailer.”

The company has also said it plans to grow its Target+ marketplace from more than $1 billion in gross merchandise value to more than $5 billion within five years.

“Target+ felt like a little bit of a startup within Target over the past few years,” Travis said. “But to move from that billion-dollar mark to $5 billion, we think the most important thing is to integrate it deeply into our strategy.”

While Amazon and Walmart have opened their platforms up to hundreds of thousands of sellers, Target has kept its marketplace invitation-only, working with partners that complement its assortment. While the company is now growing the business, Target continues to take a “curated” approach, Travis said. This involves applying the same merchandising knowledge from its stores to vetting the growing third-party selection.

“The way we think about it is really curation at scale,” she said. “We have confidence … that we can continue to grow at a rapid pace for a marketplace without opening the floodgates — while ensuring that we are bringing product into the marketplace that is of quality, that’s curated.”

Accelerating technology programs is one of the four priorities for the company outlined by new CEO Michael Fiddelke. These programs include Roundel, Target+ and Target Circle 360, alongside new AI capabilities. The company is also focused on “reclaiming merchandising authority,” elevating the in-store experience, and strengthening its teams and communities.

“We don’t chase technology for technology’s sake,” Fiddelke said during a presentation to investors in Minneapolis on Tuesday. “Whether it’s making it easier for guests to find the perfect product when they browse our aisles or putting technology in the hands of our team so they can better serve our guests, our tech investments are all in service of our ambition to be the most delightful experience in retail.”

Target plans to increase its capital investment plans by more than $1 billion in 2026, according to a news release. This includes increasing brand marketing and new technology, including AI, as well as new in-store displays, updated floor plans, store payroll and training. The retailer plans to open more than 30 new stores and remodel 130 this year. It’s set to open its 2,000th store later this month.

“It might seem ironic, but as the digital leader, when I hear investment in stores, I also hear investment in digital,” Travis said. “Stores are the heart of the company. It’s where guests build the first relationship point with Target, and when they have an enjoyable experience in the stores, they’re going to walk into our digital platform and download our app and transact more often there, as well.”