Target reassesses AI strategy as usage-based pricing forces cost trade-offs across operations

Target pushes deeper AI adoption, reviews usage‑based pricing, India head says

BENGALURU, May 25 (Reuters) - Target is moving from "using AI to running on AI," but a shift in the pricing of the technology by its providers is prompting the U.S. retailer to reassess the way it is deployed, its India head told Reuters on Monday. "It's about the intentional use and integration of AI rather than deploying it everywhere...," Target India President Andrea Zimmerman said. She said there are "significant investments" being made in ensuring that teams have the right ⁠tools for their jobs. AI firms such as Anthropic and OpenAI are increasingly shifting to token-based pricing that charges customers based on usage, instead of a subscription-based service, reflecting a broader reset in AI economics and raising costs for enterprises. "It is forcing us to re-evaluate our strategy," Zimmerman said. Discussions around AI pricing are "at the highest level in both our architecture forums as well as in our senior leadership forums within technology," she told the Reuters summit in Bengaluru. Target's global center in India has verticals such ⁠as merchandising, digital, stores and supply chain, employing about 5,600 people. About 40% of Minneapolis-based Target's tech workforce is based in Bengaluru. In India, the company is looking at ramping up investment in its analytics teams in a bid to turn growing volumes of data ⁠into actionable insights at a faster clip, she said. "We work to adapt really quickly when we see that consumer demand or sentiment start to shift," Zimmerman said. The retailer has struggled with three straight years ⁠of declining revenue as cost-conscious shoppers traded down to cheaper alternatives. Under new CEO Michael Fiddelke, the company plans to spend an additional $2 billion this year on new ⁠stores, remodels, and AI initiatives. "AI is fun, exciting and interesting to think about," Zimmerman said. "Change isn't going to be immediate, and it is certainly not free." Reporting by Haripriya Suresh and Aishwarya Venugopal in Bengaluru; Editing by Anil D'Silva Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence Haripriya Suresh Thomson Reuters Haripriya reports on India's $254-billion Indian information technology (IT) industry, the country's burgeoning GCCs, as well as new-age startups. With seven years of experience, she has previously reported on politics, civic issues, crime, and breaking news in south India, and tracked the country's gig economy. She has a degree in Media Studies with a specialisation in journalism from the Symbiosis Centre for Media and Communication.

Target India head says retailer weighing AI tool costs amid shift to usage-based pricing

BENGALURU, May 25 (Reuters) - Target India head said on Monday that a shift to usage-based AI pricing is pushing the U.S. retailer to look more closely at making costly tools available for its employees. AI firms such as Anthropic and OpenAI are increasingly shifting to token-based pricing that charges customers based on usage, instead of a subscription-based service, reflecting a broader reset in AI economics and raising costs for enterprises. "It is forcing us to re-evaluate our strategy," Target's India President Andrea Zimmerman told Reuters, adding that the retailer's size and scale mean it has to look at trade-offs between employee needs and demands. However, Zimmerman said there are "significant investments" being made in ensuring that teams have the right tools to do their jobs. "(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 said. Target's global center in India has verticals such as merchandising, digital, stores and supply chain, employing about 5,600 people. About 40% of Minneapolis-based Target's tech workforce is based in Bengaluru. In India, the company is looking at ramping up investment in its analytics teams in a bid to turn growing volumes of data into actionable insights at a faster clip. "We work to adapt really quickly when we see that consumer demand or sentiment start to shift," Zimmerman said. The $57-billion retailer has struggled with three straight years of declining revenue as cost-conscious shoppers traded down to cheaper alternatives. Under new CEO Michael Fiddelke, the company plans to spend an additional $2 billion this year on new stores, remodels, and AI initiatives. "AI is fun, exciting and interesting to think about," Zimmerman said. "Change isn't going to be immediate, and it is certainly not free." (Reporting by Haripriya Suresh and Aishwarya Venugopal in Bengaluru; Editing by Anil D'Silva) By Haripriya Suresh and Aishwarya Venugopal