Retailers are increasingly investing in artificial intelligence to enhance efficiency in their supply chains and enrich the customer experience. Reports from Q2 earnings calls confirm executives from companies like Gap, Dollar General, Ulta Beauty, and Kohl’s have underscored the role of AI innovations, such as chatbots and predictive models, in transforming both customer-facing services and internal processes.
AI Transformations Intensify in 2026
In the latter half of 2026, the retail sector plans a considerable increase in AI-driven strategies, aiming to streamline key operations like supply chains and enhance the shopping experience. Kecia Steelman, Ulta President and CEO, highlighted that AI is being adopted gradually to boost productivity and efficiency. She noted potential long-term advantages as these AI advancements allow for scaling across the company, delivering added value over time.
Furthermore, Ulta appointed Kelly Garcia, formerly with Domino’s, as Chief Technology Officer in July. Garcia is expected to drive the company’s tech evolution under the Ulta Beauty Unleashed initiative, a strategy reflected across the retail industry as businesses modernize technologies and expand AI usage.
Consumer Demand and AI Integration
With consumers being more discerning amid rising prices, retailers feel pressured to embrace AI. Bain & Co.’s Aaron Cheris emphasized the essential need for companies to articulate their AI strategies to stakeholders. This focus on AI ensures that companies can address pressing business aspects, including enhancing customer interactions.
Prominent examples include Home Depot’s AI shopping tool, Magic Apron, and Walmart’s commerce agent, Sparky, both underscoring AI’s role in improving customer experience. Additionally, many firms look to AI for operational simplification and cost reduction, especially through supply chain management. Gap, for instance, is projected to allocate $650 million towards technology, new stores, and supply chain efforts this year.
Innovative Retail Strategies
Both Gap and Ulta have embarked on AI projects focused on streamlining supply chains. Ulta leverages its prior technological investments, enhancing speed to customers via AI-powered sourcing, which optimizes omnichannel inventories. The company also employs AI for content creation and search enhancements to bolster product discovery on its platforms.
Kohl’s CEO Michael Bender expressed optimism about their AI shopping assistant’s early success, seeing it lead to improved conversion rates and greater revenue per visit. He foresees significant opportunities in AI-assisted shopping experiences. Meanwhile, Dollar General CEO Todd Vasos highlighted new agentic operating systems meant to enhance productivity. The company reported a 5.2% increase in net sales, reaching $11.3 billion in the recent quarter.
According to Cheris, as AI becomes more prevalent, consumers will notice more personalised services through AI-driven customer service tools. AI strategies in marketing and supply chain management could make both online and offline interactions feel more intuitively aligned with individual customer preferences, though customers might not always be aware that AI tools are at play.
Reporting based on coverage first published by retaildive.com.