By Mark Seavy

Across the retail landscape, excitement is building around artificial intelligence (AI) and its ability to revolutionize business. Currently, many retailers are focused on using the technology to improve customer service and experience as well as inventory management.

For the most part, those efforts are being deployed on a small scale for testing before being expanded more broadly.

Online resale platform ThredUp, for example, has been testing AI-enabled search since January with just five percent of its customers. Search was a logical starting point, since ThredUp has more than four million products available from 35,000 brands spanning apparel, accessories, and shoes. The technology ThredUp has deployed promises to sharply narrow product searches to those best aligned with a consumer’s interests.

ThredUp’s AI tool enables shoppers to search for specific items like dresses, for products that are relevant to specific occasions such as a wedding or banquet, and for products that conform to a certain tone, such as “Academy Award chic,” ThredUp CEO James Reinhart said.

In the case of Canadian retailer Roots, AI technology is being used to “optimize” inventory distribution across stores to account for local variations in product demand with a goal of delivering personalized content and recommendations, according to Roots CEO Meghan Roach.

“Notwithstanding the replenishment opportunities, we are pleased with a lower inventory balance that was achieved,” Roach said. “Through continuous rebalancing of our assortment and AI-powered improvements to our inventory allocation and replenishment capabilities, we expect that sales growth can be attained without having to return to the historical inventory levels.”

The goal, according to many of the attendees at The Lead Summit in New York last week, is to more deeply personalize products and experiences for consumers. It’s a trend that was already well underway prior to the recent broadening of the availability of AI, but it’s helping to push the popularity of the technology. In fact, according to Statista, the market for AI is forecast to increase to $1.8 trillion by 2030 (up from $200 billion in 2023).

As a result, categories and markets that have been largely untouched by AI are now developing new offerings, systems, or platforms that are powered by the technology.  Online eyewear supplier Zenni Optical has deployed AI to enable consumers to find the best-fitting glasses in seconds and automatically scan their prescriptions rather than manually inputting the information.

That shift at Zenni, which has a catalog of more than 3,000 frames available, tracks with a Google survey that showed 59% of retailers said customer service was the biggest opportunity for investment in AI, according to Paul Tepfenhart, Global Director of Retail Industry Strategy & Solutions at Google.

But David Ting, Chief Technology Officer at Zenni, said the use of AI becomes more complicated as companies determine how best to implement it. Should the technology be a one-off, or incorporated into the overall strategy? And at what point should AI start to work autonomously, if at all?

“You are putting a lot at risk when you have a piece of software making decisions for your business,” Ting said.

Another complicating factor in the deployment of AI is the need for dedicated staff. In addition to developing the program and launching the technology, companies also need team members to oversee these new efforts and make adjustments as necessary. This includes not only making sure the AI meets the needs of the consumers, but also making sure it meets the needs of the brand and its storytelling.

“AI is an enormous leap forward for us in bringing emotion and storytelling to the millions of unique shopping journeys that regularly happen on ThredUp,” Reinhart said.