Artificial intelligence dominated conversations in 2023, forcing fashion and retail leaders to begin considering how best to use the technology to solve their biggest problems.
The overwhelming sentiment—at conferences, in intimate conversations and in practice—proved to be “If you’re not playing already, you’ll be left behind.” But in many cases, that’s all fashion and apparel retailers seemed to do with the technology in 2023: play.
That could change in 2024, practitioners and experts say.
Wendy Karlyn, chief client officer at Rightpoint, an IT consulting firm, said she projects retailers will begin putting their cash flow behind their AI experiments this year.
“2024 is going to be the year of the commitment, and the year of the investment and the [year of] planning to make things happen. I think you’ll really start to see things move from inconsistent trials, to [late] 2024 into 2025 seeing [AI] everywhere, really adopted both by organizations, retailers and customers.”
But to capture real impact from the technology—and generative AI in particular—retailers may have to commit to major system overhauls and transformational innovation, said Scott Likens, PwC’s global AI and U.S. innovation technology leader.
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“Companies will miss out on this very important moment in time if they view gen AI as an add-on to their business instead of something that could completely transform their operations,” Likens told Sourcing Journal. “Companies should think beyond just small efficiencies and think about areas they can truly transform with the power of humans and gen AI together.”
Today vs. tomorrow
Innovators have made rapid and staggering advancements in AI in recent months, at a rate previously unprecedented for technology. What proves a focus for retailers one week could be obsolete by the next—and experts said that trend will only continue.
Richa Agarwal, a fashion and apparel industry advisor who previously worked at PVH Corp., Kalypso and Eileen Fisher, said retailers should plan to see much fluctuation in the technology over the first half of the year.
“Towards the end of 2024 is when you’ll really start to see very wide-scale adoption,” Agarwal said. “With AI, the technology itself is evolving so fast, that it’s very hard to predict what’s going to happen in the next six months.”
In order to keep up, though, retailers need technology systems that can handle AI if they plan to bring these efforts in house.
Paul Pallath, vice president of applied AI practice for Searce, a cloud computing and analytics services provider, said enterprises will need to evaluate legacy technology systems if they plan to integrate newly iterated technology into their stacks.
“The systems in place are not up to speed with the rapid pace at which AI is changing. There are existing systems [that are] very difficult to rip out to put an AI-first product into that mix,” Pallath said. “Even if you can do AI, integrating that into the process workflows is another challenge. If these companies have [existed] for years, changes in the processes are going to be even more difficult because there is an element of people who actually drive these processes. Change management is a big element here.”
Most likely use AI cases for fashion in 2024
Data from Aptean’s 2024 Trends and Outlook for North America report shows that 38 percent of respondents said their companies already use AI, and 27 percent of respondents said their employers are in the process of implementing AI.
But John Robinson, vice president of client engagement for Aptean’s Exenta, said that those numbers may not be indicative of the true percentage of fashion companies using AI today.
“There’s forecasts, and then there’s reality. The fact of the matter is, I think, any medium-to-large size fashion/apparel company will be using some AI this year,” Robinson said. “Some are using it already and they just don’t know that it’s AI; it’s been labeled as something else, it’s been labeled as a feature.”
Agarwal has observed a number of companies in the space using AI for the cumbersome process of fabric digitization in 2023, a trend she expects to continue this year.
But she also noted that AI’s rapid development could not just transform other technologies—but help speed up their adoption, too.
“By the end of 2024, [early] 2025 I think that people will become a lot more comfortable leveraging 3D technologies for product development purposes. I think AI will actually aid the adoption of 3D technologies because of generating digital twins of clothing and digital twins of people,” Agarwal noted. “That’s what AI can do. It can be a catalyst for adoption of other technologies.”
Agarwal and Karlyn said they expect, in the latter half of 2024, brands will begin adopting generative AI for consumer-facing use cases, in addition to behind-the-scenes help.
Karlyn said 2024 use cases will be heavily focused on the customer experience and personalization—and that goes beyond adding a chatbot to a brand’s website.
Those use cases could include last-mile delivery, optimizing reverse logistics, better recommendations on brand e-commerce sites, richer in-store interactions and more. Karlyn noted that personalization alone doesn’t create a consumer’s outlook on a brand; interactions and convenience do.
Using AI to optimize backend systems could strengthen customer loyalty, even if shoppers don’t know that AI is part of creating a differentiated experience, Karlyn said.
For that reason, many brands had already begun partnering with third-party partners to use AI for forecasting, supply chain optimization and inventory management in 2023. Robinson said he expects existing AI partnerships, especially those that supercharge retailers’ ability to complete mundane tasks, to strengthen in the year ahead.
And, on the design side, experts said they expect to see more companies using generative AI to help creatives design clothing. But all experts agreed the technology will only augment human designers, rather than replacing them.
“[AI] is not going to fully design a garment for me, because there’s too much feeling and too much intelligence that goes into deciding, ‘What am I going to market with?’ Being creative involves a lot of intelligence. Clearly, it’s not just luck,” Robinson said. “You’re still going to always have to have humans involved in those decisions, but if AI can point me in the right direction and narrow it down from 100 options to 10 options, it just saved me a tremendous amount of time.”
Consumers don’t really like AI—unless they can’t see it
Even as brands integrate AI systems and tools into their technology portfolios, one of the toughest nuts to crack could be the consumer psyche. Data shows consumers have not been as enthused about companies’ AI adoption as executives seem to be.
In a survey from Gallup and Bentley University, 79 percent of Americans indicated they do not trust companies to use AI responsibly. Meanwhile, Dunnhumby data shows only 20 percent of Americans “mostly” or “completely” trust AI.
Despite those figures, companies have been using AI for years—to serve up personalized apparel recommendations based on previous purchases; to recommend Netflix movies; to optimize routes for faster package delivery to consumers. But, as Robinson noted of corporate employees, it’s likely that consumers don’t even know they have been using AI.
Karlyn said for the best outcomes, retailers should consider keeping it that way in 2024.
“I think it needs to stay invisible to customers. I don’t know how much ‘why?’ they need to know,” Karlyn continued. “They just need to have a great experience, so that they create a meaningful connection with the brand, with the retailer.”
The laggard problem
Retail in general, but especially fashion, has a reputation for laggard-style adoption of new technologies.
But in order to stay nimble, the industry will have to find viable ways to participate in the ever-changing technology that is AI.
PwC research from 2023 showed that only a small percentage of businesses globally are considered what the firm calls “EmTech Accelerators,” or companies already deriving significant business value from generative AI and other emerging technologies.
Per the study, to play how the winners do, companies could consider increasing their budgets for AI, setting concrete and achievable goals for the technology and drawing on inspiration from industries that historically have a higher percentage of early adopters.
If companies make strides in 2024, the revenue and consumer favorability payoffs could be significant, experts noted.
“By strategically harnessing AI’s potential… brands can redefine the industry and set the gold standard for the modern consumer,” said Kelly Pedersen, PwC’s U.S. retail leader.
And from where the experts sit, harnessing and leveraging AI to tackle the industry’s most pressing problems—like supply chain, returns, sustainability and consumer sentiment—is not a luxury; it has become a necessity.
“I think gen AI is a tool they’re all looking to leverage to help drive a lot of that, and it’s really…need-based. I don’t think any retailers are in a position to not create updated infrastructure [for AI]. Obviously, the industry has been hurting and has fallen behind and has been playing catch up since Covid, so I think it’s a necessity,” Karlyn said.