The retail giant Target is reconsidering its artificial intelligence strategy as technology companies increasingly adopt pricing models that charge based on actual usage rather than flat subscription fees, according to the company’s India operations chief.
Companies like Anthropic and OpenAI are moving toward token-based billing systems that calculate costs based on how much customers actually use their services, marking a significant change in AI economics that’s driving up expenses for large businesses.
“It is forcing us to re-evaluate our strategy,” Target’s India President Andrea Zimmerman told Reuters on Monday, explaining that the company’s massive size means leadership must carefully weigh employee requirements against budget constraints.
Despite the pricing challenges, Zimmerman emphasized that Target is making “significant investments” to ensure workers have access to necessary technology tools.
“(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,” she explained.
Target’s Indian operations center encompasses multiple business areas including merchandising, digital services, retail locations, and supply chain management, with approximately 5,600 employees. The Bengaluru facility houses roughly 40% of the Minneapolis-headquartered company’s technology workforce.
Within India, the retailer plans to increase investment in analytics departments to convert expanding data volumes into practical business insights more rapidly.
“We work to adapt really quickly when we see that consumer demand or sentiment start to shift,” Zimmerman noted.
The $57-billion company has faced challenges with three consecutive years of falling revenue as budget-minded customers have chosen less expensive shopping options.
Under new CEO Michael Fiddelke, Target intends to invest an extra $2 billion this year in opening new locations, renovating existing stores, and advancing AI projects.
“AI is fun, exciting and interesting to think about,” Zimmerman observed. “Change isn’t going to be immediate, and it is certainly not free.”
