In the second half of 2026, retailers plan to accelerate their AI strategies to improve efficiency in their supply chain, customer experience, discoverability and internal operations.
Executives from Gap, Dollar General, Ulta Beauty and Kohl’s highlighted how they’re using AI technologies, including chatbots, predictive models and agentic AI systems in their earnings calls last week. C-suite leaders described the evolving capabilities as short-term investments and long-term strategies for their customer-facing offerings as well as internal workflows.
“We’re in the early stages of applying AI across key corporate uses to enhance how we work, improve productivity and drive greater efficiency,” Ulta President and CEO Kecia Steelman said during the company’s Aug. 27 Q2 earnings call. “As these capabilities mature, we see opportunities to scale AI thoughtfully across the organization and deliver incremental value over time.”
Ulta named former Domino’s executive Kelly Garcia as its new CTO in July. He will continue to advance the beauty retailer’s technology capabilities and its tech-driven Ulta Beauty Unleashed strategy. The company has been modernizing its core technology systems and scaling AI use in the last few years, two key priorities for several other businesses in the sector.
Retailers are turning to AI as they scramble to win over consumers, who have become choosy about how they spend their money as gas and grocery prices go up. The pressure to use AI is steep, said Aaron Cheris, partner and global head of Bain & Co.’s retail practice.
“Everybody and their sister has to have an answer to the question of ‘what are you doing with AI’ for their board, for their investors,” he told CIO Dive.
AI deployment in retail
As AI is deployed throughout the retail industry, employees and customers are facing the technology more regularly in the shopping experience.
Few companies seek out a big AI transformation, desiring to be an “AI-first company,” Cheris said. Instead, most fit into the category of overhauling some aspect of the business with AI, such as the customer experience. Tools like Home Depot’s generative AI shopping tool Magic Apron or Walmart’s commerce agent Sparky stand out as examples of this approach, Cheris said.
Other companies seek out AI to simplify their operations or lower costs, often through supply chain management and routing optimization efforts. And others put their investment toward foundational data work to make business operations run more smoothly, Cheris said.
Gap and Ulta are pursuing AI projects related to supply chain, according to their earnings calls. Gap’s capital expenditure is expected to reach $650 million this year, for new stores and remodels, technology and its supply chain investments.
Steelman said during Ulta’s call Thursday that it is leveraging prior investments in technology, automation and network optimization to improve speed to guests. The beauty retailer is also using AI-powered sourcing capabilities to optimize omnichannel inventory to meet customer demand more efficiently.
The company is also turning to AI for search and discovery, using content creation and enriched product information across AI platforms like ChatGPT, Steelman said, and promoting the company’s on-site shopping agent, Ulta AI.
Kohl’s CEO Michael Bender said during the company’s Aug. 26 earnings call for the second quarter of the company’s 2027 fiscal year that he is encouraged by early signs of the store’s AI shopping assistant, which is resulting in stronger conversion and higher revenue per visit.
“We see significant opportunities to expand AI-assisted discovery, gifting and purchase confidence over time,” Bender said.
While it’s early in the company’s AI journey, Dollar General CEO Todd Vasos said during the company’s Aug. 27 earnings call for the second quarter of its 2027 fiscal year that they’re building agentic operating systems for enterprisewide workflows to improve productivity. Dollar General’s net sales jumped 5.2% year over year to $11.3 billion during the quarter.
Consumers will see AI investments in the form of more customer service chatbots and more AI-powered shopping assistants, Cheris said.
Shopping may feel more personalized — emails and websites may feel more relevant because companies are investing in AI marketing and supply chain strategies, or shopping in-store might feel more tailored as human associates are now often using AI tools that provide insights to shopping habits, he said.
“You as a customer wouldn’t even know that they were powered by AI necessarily,” Cheris said. “But you’d think ‘wow, they’re really smart.”
