Target and OpenAI Reveal How Retail Will Shift From "Using AI" to "Running on AI" in 2026

Artificial intelligence is no longer an experimental tool in retail. In 2026, it is quickly becoming the operating system behind the modern shopping experience. At NRF 2026, a panel featuring Prat Vemana, Ashley Kramer, and moderator Poonam Goyal explored how retailers are moving beyond pilots and accelerating AI adoption at enterprise scale.

The conversation highlighted how Target is embedding AI across its business to improve team member productivity, enhance guest experiences, and strengthen vendor relationships. OpenAI also shared how retailers are evolving from basic automation into agentic AI systems that can act on behalf of customers and employees.

AI in 2026: The Year Retail Moves From Pilot to Production

Ashley Kramer, representing OpenAI, emphasized that 2026 is a turning point for the industry. Retailers are transitioning from testing AI use cases to deploying AI systems that can meaningfully reshape customer journeys.

According to Kramer, the future of shopping is conversational. Customers no longer search using basic keywords. Instead, they ask detailed questions such as what outfit to wear for a specific event, or what products best support their lifestyle. The expectation is that AI will understand context, preferences, and history to deliver more relevant recommendations instantly.

This shift is creating a new standard for personalization, loyalty, and customer satisfaction.

Target's AI Strategy: Moving From "Using AI" to "Running on AI"

Prat Vemana, who leads Target's technology teams, described the company's AI strategy as a transformation from simply using AI tools to fully running on AI.

This approach allows Target to modernize its foundational systems while innovating at a faster pace. Vemana explained that Target's strategy remains grounded in what has always made the retailer successful: merchandising authority, elevated guest experiences, and strong design leadership. AI is being deployed to amplify those strengths rather than replace them.

Target's partnership with OpenAI is central to accelerating innovation and enabling the company to build new experiences faster than traditional development cycles allow.

How AI Is Empowering Target Team Members

A major theme of the panel was that AI is most effective when it amplifies people rather than replacing them. Vemana explained that AI is already improving day-to-day work for Target team members through both embedded intelligence and conversational tools.

Target's Trend Brain: AI for Merchandising and Design

One example discussed was Target's use of AI to support its merchandising and design teams. Vemana highlighted an internal tool described as a "trend brain," designed to help merchants and designers organize insights, gather inspiration, and work faster.

By pulling from sources such as runway trends, magazines, and social media, the tool enables Target teams to access information quickly and move from concept to product decisions with greater speed.

ChatGPT Adoption at Target: 18,000 Team Members Using AI

Target has also rolled out ChatGPT access to 18,000 team members, and Vemana noted that more than 60 percent use it regularly each week.

One real-world example came from a store in Long Island during the holiday season. A store leader used AI to quickly restructure shift schedules after multiple team members called in sick. By uploading scheduling changes and using approved prompts, the team member was able to rebuild a complex shift plan in minutes instead of hours.

This type of productivity improvement, even in small increments, can have a major impact at enterprise scale.

What Makes AI Rollouts Successful in Large Organizations

Ashley Kramer explained that successful AI adoption is rarely dependent on company size. Instead, it comes down to leadership alignment and organizational readiness.

OpenAI looks for companies that have strong executive buy-in and a commitment to educating employees from the bottom up. AI literacy is now a requirement for scaling impact, especially across thousands of employees.

Kramer emphasized that AI strategy should begin with people, then expand into processes, and eventually evolve into agentic AI systems that can take action on behalf of the user.

The Future of Retail Search Is Conversational

Both speakers agreed that retail search is undergoing a major shift. Traditional keyword-based shopping is being replaced by conversational queries.

Instead of typing "knee brace," customers might ask for "low impact workouts for my knees," and expect the retailer to recommend not only workout equipment but also supportive gear, wellness products, and related items.

Target has rebuilt its search engine using generative AI to meet this new customer expectation. This improves product discovery and makes digital shopping feel more personalized and intuitive.

AI Agents: The Next Phase of Retail Innovation

Ashley Kramer described the next evolution as agentic AI, where systems move beyond responding to prompts and begin acting on behalf of customers.

Instead of a shopper spending hours researching products, AI agents will gather information, apply preferences, understand context, and deliver solutions such as a full outfit recommendation. Over time, the goal is to build enough trust that AI can complete transactions and manage decisions with minimal friction.

This shift could dramatically reduce the time customers spend planning purchases, while improving conversion and satisfaction.

How AI Is Improving Vendor Relationships at Target

Target's AI transformation is not limited to guests and team members. Vemana shared that AI is also improving the vendor experience by enabling faster access to information and more efficient onboarding.

Joy: Target's Vendor Support AI Bot

Target has launched a vendor-facing AI assistant called Joy, designed to help vendor partners access answers around the clock. The tool supports partners globally by helping them navigate policies, workflows, and operational requirements without waiting for human support.

AI Agents for Vendor Credibility and Risk Assessment

Target is also applying agentic AI to help assess vendor credibility. Since Target operates as a curated marketplace rather than an open marketplace, vendor evaluation is critical to protecting customer trust.

AI agents now analyze factors such as product ratings, marketplace performance, social media presence, and public reputation. This allows analysts to make faster, more accurate decisions while saving thousands of hours of manual review.

Responsible AI: Security, Governance, and Trust at Scale

As AI adoption accelerates, responsible AI remains a priority. Vemana explained that Target established a cross-functional responsible AI group that includes legal, HR, cybersecurity, and policy teams. The goal is to ensure every AI deployment is safe, secure, and aligned with company values.

Target also built an internal centralized platform called Think Tank, allowing teams to deploy AI capabilities faster while maintaining governance and oversight.

Ashley Kramer reinforced that responsible AI begins with data privacy. OpenAI's enterprise model ensures customer data is not shared and is not used to train public models. OpenAI also conducts extensive model evaluations and works closely with customers to ensure outputs remain trustworthy and transparent.

Key Takeaways: What Retail Leaders Should Do Next

As the panel wrapped up, both speakers shared a clear message for retailers heading into 2026.

Prat Vemana advised businesses to avoid implementing AI simply to follow trends. Instead, AI should be tied directly to business goals and roadmaps. He also emphasized that AI is not just a technology initiative. It requires full organizational participation.

Ashley Kramer echoed that companies should not remain on the sidelines. The most successful retailers will be those that invest early, build the right partnerships, and create roadmaps that evolve over time through measurable milestones.

AI Is No Longer About Experimenting. It Is About Executing.

The NRF 2026 panel made one thing clear: retail AI is shifting into a new phase. The winners will be companies that scale AI across operations, teams, and customer experiences while maintaining strong governance and clear strategic priorities.

Target's partnership with OpenAI offers a glimpse into the future of retail, where AI amplifies creativity, accelerates product development, transforms search, and enables faster decisions across the entire ecosystem.

In 2026, AI is not simply a tool retailers use. It is becoming the foundation that retail runs on.