Target's India president Andrea Zimmerman said the retail group is rethinking its approach to provisioning AI tools for employees as vendors increasingly adopt usage-based, token pricing models.
AI firms such as Anthropic and OpenAI are moving away from subscription plans toward token-based charging that bills customers according to usage rather than a flat fee. Zimmerman said that shift "is forcing us to re-evaluate our strategy," noting that Target's scale makes it necessary to consider trade-offs between employee needs and overall demand within the organisation.
At the same time, Zimmerman stressed the company is investing in technology. She told Reuters there are "significant investments" under way to ensure teams have the right tools to perform their roles. She added that AI pricing "sits at a technical debate at the highest level in both our architecture forums as well as in our senior leadership forums within technology."
Target's global centre in India supports multiple verticals including merchandising, digital, stores and supply chain, and employs roughly 5,600 people. About 40% of Minneapolis-based Target’s technology workforce is located in Bengaluru.
Within India, the company is planning to grow its analytics capabilities to convert increasing volumes of data into actionable insights more quickly. "We work to adapt really quickly when we see that consumer demand or sentiment start to shift," Zimmerman said.
The $57-billion retailer has confronted three consecutive years of falling revenue as cost-conscious shoppers migrated toward cheaper options. Under new CEO Michael Fiddelke, Target intends to invest an additional $2 billion this year across new store openings, remodels and AI initiatives.
On the prospects for rapid change, Zimmerman noted: "AI is fun, exciting and interesting to think about. Change isn’t going to be immediate, and it is certainly not free." Her remarks underline a balancing act for Target - continuing to fund technology and analytics growth while managing the rising expense profile associated with usage-based AI pricing.
Context and implications
- Target faces technology procurement choices as major AI vendors transition to token-based pricing that can escalate costs tied to usage.
- The retailer is simultaneously expanding analytics and maintaining investments in stores and digital operations under its current capital plan.
- Debate over AI economics is occurring at senior technical and leadership levels, reflecting the strategic importance and cost sensitivity of these tools.