By Mark Seavy  

Retailers are investing in artificial intelligence (AI) for a number of purposes—including inventory management, financial forecasting, planning, and customer relations—and to varying degrees. 

And while returns on that investment may not be immediate, those attending the National Retail Federation (NRF) Show in New York this week were banking on AI. 

In addition to speeding operational tasks, retailers are looking to AI to tighten ties with consumers and further blur the lines between online and in-store experiences to make shopping as much an experience as it is a transaction. 

“So much of the focus is how AI can improve productivity and, while that is true, the bet to a larger extent is on whether AI can drive revenue rather than reduce costs and rebalance the workforce,” said Baltazar Hasselsteen Ozonek, VP of AI and Innovation at jewelry retailer Pandora. “The true potential lies in that we can create experiences digitally that are as rich as the physical. We will try to connect with people’s stories and why they entered our store. This can scale instantly and create a rich experience across all channels.” 

Online retailer Wayfair, for example, opened a 150,000-square-foot store in Willamette, IL last year and operates around 10 smaller locations under its Joss & Main, Allmotion, Birch Lane, and Perigold brands (the latter of which is opening this year in Houston, TX and West Palm Beach, FL. ) with a higher-end mix of furniture, lighting, bath, tile, and kitchenware). Wayfair is using data and Tote’s AI technology to speed up room design, 25% of which can be completed before the customer enters the store, said Kevin O’Riordan, Head of Supply Chain Engineering at Wayfair. At the Illinois location, the store’s 50,000 SKUs are blended with the online retailer’s 30 million, O’Riordan said. 

For its part, the 325-store PacSun—which plans to open 15-20 locations this year and another 20 stores in 2026, including its first in the United Arab Emirates—has created an “AI Council.” The group is headed by Chief Technology and Information Officer Shirley Gao as it embarks on an 18-month project to integrate Impact Analytics’ AI technology across all aspects of the business, according to CEO Brieane Olson. The technology will be embedded in an AI dashboard, she said.  

These rich experiences will also feature greater personalization for shopping and incorporate “social proofing,” an eCommerce strategy for building trust with customers and encouraging purchases by highlighting customer reviews and testimonials, said Dan Finley, CEO at online retailer Boohoo. The strategy is important in online shopping, where customers frequently rely on peer opinions before buying.  

Yet even with so much customer data to inform AI-powered strategies, the bottom line for success continues to be the speed at which retailers can deliver products both online and in store, retail executives said. Amazon, for example, shifted from national to regional distribution centers to bring products closer to where they are purchased. The retail giant has 110 fulfillment centers, 55 of which double as delivery locations to provide same-day service. 

“AI is becoming transformative for our business, and we haven’t had a technology revolution like this since the start of the internet,” said Doug Herrington, CEO of Amazon Worldwide Stores. “An AI system will be able to drill down and that will provide a whole [new] level of convenience.”