The news: Target is leaning into AI by naming Chandhu Nair as its first chief AI officer and elevating Purvi Shah to senior vice president of UX. The company aims to move “from insight to action faster” while keeping human-centered design a priority.

Why it matters: While mass merchant rivals Amazon and Walmart, not to mention retailers ranging from Kroger to Michaels, are putting AI-powered agents front and center across their digital experiences to help shoppers find products, Target is taking a different tack. It is focusing on weaving AI into backend systems to improve inventory management, simplify processes, and help the retailer make faster, better-informed decisions.

Implications for Target and other retailers: Target’s focus on using AI to improve back-end functions has merit. Roughly 2 in 5 CEOs worldwide say AI is already delivering measurable impact in core operations or production (41%) and strategy and decision-making (41%), while 30% point to supply chain and procurement, per EY-Parthenon. Those are areas where Target’s approach could pay dividends.

But focusing too heavily on back-end functions risks leaving an opening on the consumer-facing side. While Target has made some moves—including launching a conversational AI tool last year to help shoppers find gifts—those efforts have been far from the more sophisticated shopping assistants offered by rivals. Target was already late to launching a paid membership program, making it difficult to convince shoppers who already pay for Amazon Prime and/or Walmart+ to also sign up for Target Circle 360. It could find itself in a similar position with AI if consumers become accustomed to using competitors’ tools.

There are already signs those tools are changing shopping behavior. Consumers who use Sparky, Walmart’s AI assistant, have an average order value 35% higher than those who don’t, while 44% of app sessions in July that used Alexa for Shopping, Amazon’s AI assistant, resulted in a sale, up from 34% a year earlier when the tool was called Rufus, per Sensor Tower data cited in Adweek.

That raises the stakes for Target and other retailers. AI can make the business more efficient behind the scenes, but retailers also need to invest in the customer-facing experience or risk ceding more of the digital shopping journey to competitors.