Target has an AI chief. Does every retailer need one?

Target hired its first-ever AI officer, Chandu Nair, at summer's end, with a mission to drive the retailer's AI strategy -- everything from the online storefront to Target's in-store associate tools.

His goal, said Nair, is to "make AI real for the people who experience Target every day."

That's pretty much a goal for every retailer and brand as AI infiltrates the shopper's journey, from product discovery to mobile checkout.

As this year's holiday season rapidly approaches, AI discovery is projected to play a meaningful role, with 72% of U.S. consumers regularly or at least occasionally tapping AI tools for ideas and recommendations and 17% of online shoppers kicking off holiday shopping with an AI platform.

Consumers, dealing with inflation and higher prices at the grocery and gas pumps, are tapping AI to save money. Over half of Gen AI adopters, 58%, are using AI for shopping advice and decision support.

Is an AI chief a necessity?

So given the consumer AI love, the big question for retailers and brands is whether it requires a specific business division and leader.

Clearly Target believes so. Kroger seems to have the same belief given it hired its first chief data and AI officer in March. Morrison, a U.K. grocer, is the most recent brand to create a specific department led by its first-ever chief AI officer.

The answer, according to Greg Serrago, retail practice lead at global IT services firm UST, is no.

"No, not every retailer needs a chief AI officer. But every retailer needs someone with the authority to orchestrate AI across the enterprise, connect it to real business priorities, and hold the organization accountable for turning AI investment into measurable value," Serrago said in an email interview.

"The title is optional; the mandate is not," he said.

Whether retailers join the bandwagon is not a matter of it, but when, according to Blaine Nielsen, president of retailers at Rithum. He views Target's AI chief decision as a signal that a bigger shift is coming to retail. A recent Rithum AI report revealed 80% of shoppers under 44 year old use AI to shop.

That healthy adoption is due to AI's capabilities in the shopper experience which has become more complex given endless digital aisles, marketplaces, social commerce and new brands.

"But more choice can also make shopping more complex. AI can take a broad assortment and narrow it down to a few relevant options based on what a shopper actually needs, in seconds," Nielsen said in an email interview.

That presents a big opportunity for retailers to turn that depth of product options into an advantage.

"With the right assortment and strong product data behind it, AI can connect customers to the right products faster and make a large catalog feel relevant and personal," he said.

The capability is driving retailers to dedicate AI leadership.

"More large brands and retailers will definitely begin formalizing AI leadership in some capacity, if they haven't done so already. AI has become integral to how companies operate and serve customers," said Nielsen.

Whether that shows up as a dedicated 'chief' suite role will depend on the retailer's size and maturity.

"What I think all brands and retailers can take from Target's decision is the importance of clear ownership. AI isn't a side project anymore. It touches product data, merchandising, content, customer experience and operations all at once," he said.

"For a company like Target, putting that kind of leadership in place signals that they're serious about coordinating AI across the business to ultimately create a more seamless shopping experience."

What the AI role should involve

Hiring a dedicated AI chief is a strategy of 'one size fits all' and there's no clear cut answer until a retailer assesses whether it makes sense, according to Serrago, whose team works with 12 of the top 25 global retailers.

In some cases, it makes sense for AI responsibility to stay with a CTO or another senior executive within these retailers.

If the decision is to designate an AI chief, brands should not make the AI leader as the one "who owns AI," said Serrago.

"They should be the person who makes sure the enterprise knows where AI matters, how it gets scaled, and who is accountable for the outcome. At UST, we've seen that roughly 70% of AI transformation value comes from people and process reinforces the point: AI leadership is ultimately about orchestrating business transformation, not managing another technology platform," he said.

Serrago recommends a model of centralized orchestration with distributed execution.

"A focused AI team should establish governance, architecture, standards and reusable capabilities, but the work itself has to live with the technology and business teams responsible for merchandising, marketing, supply chain, operations and the customer experience," he said. "If AI becomes its own organizational island, it becomes much harder to turn experimentation into enterprise value."