This story was originally published on Retail Dive. To receive daily news and insights, subscribe to our free daily Retail Dive newsletter.
As one of the most promising, and fear-inducing, technologies of the day, artificial intelligence was a frequent topic of conversation across panels at Shoptalk’s spring conference in Las Vegas. Much like at the National Retail Federation’s Big Show in January, retailers considered the possibilities of the tech, how they go about implementing it and the ways retail remains very human.
Perhaps one of the most succinct statements about retail’s use of AI came from Mandeep Bhatia, senior vice president of global digital product and omnichannel innovation at Tapestry, who was in turn quoting someone else.
“Humans won’t be replaced by AI. Humans with AI will replace humans without AI,” Bhatia said, a sentiment that was echoed across many panels as retailers considered how the tech could be useful and where human involvement is still very much needed.
Across the industry, retailers are turning to AI to help with customer experience initiatives and to boost loss prevention, while shoppers are turning to the technology to help them with purchases as well. Opinions are thus far mixed, but there’s no doubt that AI is one of the hottest testing grounds in retail right now.
Here’s a sampling of what companies had to say about the technology at Shoptalk Spring — and how they’re using it now.
At Toys R Us, the brand jumped headfirst into AI with OpenAI’s Sora tool. According to Kim Miller, global chief marketing officer of toys at Toys R Us owner WHP Global, the retailer was the first to make a branded video through Sora. The retailer chose to make an homage to Charles Lazarus, who founded Toys R Us.
Although video storytelling with AI “has a long way to go,” Miller said it’s been improving quickly — and the effort at Toys R Us paid off.
“The video went viral,” Miller said. “A lot of people were asking, ‘Why did you do it?’ And I said, ‘The train has left the station and we wanted to be the first one on it. And we wanted to embrace it.’ We want to always be embracing new ways to tell stories and to reach people so that they are interested in not only the story you're telling, but how you're telling it as well.”
“All the small guys, startups, they're going — they're on the train first. They're experimenting. They're doing it. Where a lot of bigger brands go, ‘I'm going to wait. Maybe it won't fit my brand DNA. It's scary.’ But it is the ones who take the risk in this moment of gaining competitive advantage [that] will win,” Karin Tracy, group lead of retail and e-commerce at Meta, said. “I feel like so many have gotten over the hump of automation … the next hump is Gen AI for creative.”
Meta already offers GenAI tools for ad creation, including background and text generation, according to Clara Shih, vice president of business AI at Meta. In one example, Shih said Living Proof saw a 13% higher click-through rate using its tools and 18% higher total purchase volume. But when it comes to creative, Tracy noted that human creativity is still a key part of that process.
“It's for the brands who figure out how to supplement the efforts of their creative team, of all the mundane stuff that's taking their time — think resizing images, writing different versions of copy, even making a still image move — these little moments that will have incremental points in performance and lead to this diversification that we know needs to happen,” Tracy said. “There's really low-risk ways you can get on the train. Doesn't have to be a full video yet, but there's ways that you can absolutely start using this and giving your creative teams time to be creative.”
Meta is also rolling out new ways for brands to use AI, including ads that customers can have a conversation with. Shih outlined a test case of this functionality with Kitsch, in which a shopper sees a video ad for a shampoo bar and has the ability to then ask the ad whether it will work for their hair type and order three different bars through the conversation. Voice agents like this also have the potential to break down silos between customer support and purchase-focused marketing chatbots, according to Shih.
“That voice agent might have a conversation with a consumer about pre-sales questions about the product — just asking if there's different allergens, how quickly can it be shipped to a certain location — but there also might be customer support questions,” Shih said. “In the past, we've deployed chatbots that were just for marketing or just for support. And so I think it's just time to make it a more cohesive customer experience and AI to lead the way and enable that going forward.”
The social media giant also just released omnichannel ads, which use AI models to connect shoppers with products that are in stores in addition to online. Shih proposed the example of a customer in Las Vegas shopping for makeup for the night, who needs to buy a product in person.
“Our local ads can now show which store nearby, across the street in the Las Vegas mall, has this particular product in stock and target us specifically because of a variety of factors that AI picks up,” Shih said.
Overall, Shih likened the state of AI now to the early days of the internet.
“Roll up your sleeves and start trying. I think that AI is one of those technologies that you really learn best by doing,” Shih said. “Those who are able to lean in, just like those who were able to embrace e-commerce early 20 years ago, it's a moment to create sustained competitive advantage.”
“I think it can be really tempting with retail tech trends to think of it as an ‘or,’ right? It’s framed as stores or digital, human-centric experiences or AI-powered experiences,” Kim Waldmann, global chief customer officer for Foot Locker, said. “It's easy to get to the ‘or,’ but really it's a false dichotomy. I think what we really believe at Foot Locker is tech enables more human powered-experiences … tech and AI can remove some of the more mundane, transactional, manual work from our store employees and free them up to do what they do best, which is be creative, storytell.”
As one example, Waldmann highlighted that the retailer is using AI to sift through customer experience data and help customer service employees resolve issues faster. That has in turn improved net promoter scores. The retailer also uses AI to create product details that are relevant for different markets — for example, translated into a different language or using different measurements — from the same product photo.
Improving search results and product recommendations on the retailer’s website is another “key focus,” according to Waldmann. But many of the applications are on the back-end. Foot Locker has invested in business reporting and intelligence functionalities that use AI, for example.
“Right now, you can make a vocal command or vocal request of the system and get, for instance, what were my gross margins and sales in Spain yesterday?” Frank Bracken, who was named president of Foot Locker last week, said. “And a report is generated automatically.”
An AI-driven workforce management system the retailer recently implemented takes into account data like sales forecasts and promotional calendars to help land the right number of employees in stores.
“The more productive we can be as an organization, the more we can flow into consumer-facing investments, whether it's brand building, whether it's storytelling or more refreshes and reimagined Foot Lockers,” Bracken said. “So it becomes a very perpetuating cycle in a great way.”
“We can't say it enough that AI is a significant opportunity, not just to run better ads, but to actually run a better business,” Sean Scott, vice president and general manager of consumer shopping at Google, said. “And I really do think the brands that are the most willing to adapt and the most quickest to adapt will be the ones that get ahead.”
For Google (and sister company YouTube), AI is behind features like Google Lens (which allows shoppers to search for items based on images), AR product viewing and local shopping. Much like Meta’s omnichannel ads, Google’s local shopping lets customers locate an item at a store nearby versus just online. As an example, Scott noted he’d used Google to locate a part he needed to fix a leaky faucet and picked it up that day at a nearby store. But it only works if brands participate.
“What that means is you have to upload not just your online inventory or not just one store’s inventory, but all of your stores’ inventory,” Scott said. “Because, again, shoppers are everywhere and if you're going to reach them wherever they're at, you need to make sure that that inventory is available for them so dads like me can fix leaky faucets.”
When it comes to features like Google Lens, Scott said the company sees about 20 billion visual searches per month and 25% of them have commercial intent. The executive also noted that AI is helping make very specific searches on Google yield more helpful results. A search for “men’s jeans for a Shoptalk keynote” brought up advice for dark washes and straight cuts, according to Scott, whereas a search for “skis for the Pacific Northwest” recommended wider skis to cope with the heavier snow in the region.
“What's really, I think, unique and amazing about all this is that we're not a retailer. We don't have any inventory. We don't ship anything,” Scott said. “And yet, over a billion times a day, people are shopping across Google.”
Summarizing associate feedback and generating product copy are two ways Tapestry is already using AI — and the luxury retailer is also considering how it can be used to generate code and experiences faster. But even as more uses become obvious, it’s important to start simple.
“Let's be real, right? There is fear in peoples’ mind, there is hesitation in peoples’ mind,” Bhatia said. “And how is it going to impact my life? How is it going to impact my job? And those things are very real and you need to acknowledge that — you need to have empathy with that.”
Bhatia stressed the need to train employees and bring them along on the journey across all levels of the organization.
“Have a lot of empathy with people, try different things and then create communities where it's safe to ask questions, where it's safe to learn, and that's how this change and training will happen,” Bhatia said.
