Major retailers racing to embed AI across operations and customer touchpoints

Heading into the second half of 2026, major retailers are preparing to ramp up their artificial intelligence initiatives aimed at strengthening supply chain performance, refining how customers discover products, enhancing the shopping experience and optimizing back-office functions. During recent earnings presentations, executives at Gap, Dollar General, Ulta Beauty and Kohl's outlined their current and planned uses of AI technologies ranging from conversational chatbots to predictive analytics and autonomous agent systems. These leaders characterized their AI efforts as both immediate tactical moves and longer-term strategic bets that will reshape both customer-facing platforms and internal business processes.

"We're in the early stages of applying AI across key corporate uses to enhance how we work, improve productivity and drive greater efficiency," said Kecia Steelman, president and CEO of Ulta Beauty, during the company's earnings call on August 27. "As these capabilities mature, we see opportunities to scale AI thoughtfully across the organization and deliver incremental value over time." Ulta recruited Kelly Garcia, a former executive at Domino's, to serve as its new chief technology officer in July. Garcia's mandate includes advancing the beauty chain's technology infrastructure and supporting its Ulta Beauty Unleashed strategy, which centers on technology-driven growth. The company has been modernizing its foundational technology platforms and expanding AI applications in recent years—priorities that resonate across much of the retail sector.

Retailers are turning to AI as they work to attract increasingly cost-conscious shoppers navigating higher prices for fuel and food. The competitive pressure to deploy AI is intense, according to Aaron Cheris, a partner and global head of retail practice at Bain & Co. "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," Cheris told CIO Dive.

AI deployment in retail

As artificial intelligence spreads throughout retail operations, both workers and shoppers are encountering these systems with growing frequency. Most retailers are not pursuing a wholesale transformation into "AI-first" enterprises, Cheris noted. Rather, the typical approach involves using AI to overhaul specific business functions, such as the customer shopping journey. Examples include Home Depot's Magic Apron, a generative AI tool for shopping, and Walmart's Sparky, a commerce-focused agent. Some retailers are channeling AI investments into operational simplification and cost reduction, particularly through supply chain optimization and logistics routing. Others are prioritizing foundational data infrastructure to enable smoother business operations overall.

Both Gap and Ulta are directing resources toward AI-driven supply chain initiatives, as disclosed in their recent earnings presentations. Gap's capital spending is projected to total $650 million during the current year, allocated to new store openings, store renovations, technology upgrades and supply chain enhancements. During its earnings call on Thursday, Steelman explained that Ulta is drawing on its earlier investments in automation, technology and network design to accelerate delivery to customers. The retailer is deploying AI-powered tools for sourcing decisions to fine-tune its inventory across online and physical channels, ensuring products align with what customers want to buy.

Ulta is also harnessing AI for search and product discovery functions, leveraging content generation and enriched product data across platforms such as ChatGPT, Steelman noted. The company is also promoting Ulta AI, its proprietary shopping assistant available on its website. Michael Bender, CEO of Kohl's, shared during the company's August 26 earnings call for its second quarter of fiscal 2027 that early results from its in-store AI shopping assistant are encouraging, with improvements in conversion rates and average spending per customer visit. "We see significant opportunities to expand AI-assisted discovery, gifting and purchase confidence over time," Bender said.

Dollar General, still in the early phases of its AI journey, is constructing agentic operating systems designed to automate enterprise workflows and lift productivity, according to CEO Todd Vasos during the company's August 27 earnings call for its second quarter of fiscal 2027. The discount retailer's net sales climbed 5.2 percent year-over-year, reaching $11.3 billion in the quarter.

From a consumer perspective, the visible manifestations of retail AI spending will likely include more sophisticated customer service chatbots and expanded AI-powered shopping assistants, Cheris said. Shopping experiences may become increasingly customized—promotional emails and website content may feel more relevant as companies invest in AI-driven marketing and supply chain strategies, while in-store visits may feel more personalized as retail staff use AI-powered tools to understand customer preferences. "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."