Report Identifies Top Retailers, Brands Embracing AI

Key findings include:

• While the index’s top performing retailers’ revenues exceed $10 billion, Lily said the variance in the ranking — from #1 Amazon to #46 BJ’s Wholesale Club, shows the differing public-facing priorities of AI. Both Amazon and Walmart (#2) lead in AI adoption and continue to significantly invest in advanced AI technologies and talent.
• No clear correlation exists between a retailer’s index rank and overall revenue, suggesting retail is still in “nascent stages” of AI integration and it is too early to see the full financial impact.
• Lowe's (#12) combines AR and AI in its Lowe's Vision: In-Store Navigation app. It uses AR to help customers find their way around the store while delivering personalized product recommendations, based on users’ interests.
• The Home Depot (#8) uses ML within its mobile app to offer guides and product suggestions tailored to individual shopper needs and interests.
• Stitch Fix (#3), a retail company with $1.6 billion in revenue in 2023, stands out because it leverages several AI-based technologies to personalize shopping, building on its original business model of tailored/recommended clothing bundles. Stitch Fix illustrates how mid-size companies can move toward significant AI adoption with focused investments while building on existing data and models.
• Some companies with higher AI adoption rankings have acquired or joined in strategic partnerships with AI firms, such as Wayfair’s (#5) acquisition of large language models (LLM) startup ThirdAI and Ikea’s (#20) investment in Waaabi, a gen AI autonomous truck company.
• Sephora’s (#91) ModiFace Color Match lets users upload a photo of an item, like a handbag or jewelry, then receive makeup shades and products to match it. Additionally, its AI-generated product descriptions have improved its search engine visibility.
• Poshmark (#18), a resale retailer with revenues of under $1 billion, recently introduced an AI-powered tool called Promoted Closet, which uses machine learning to match shoppers’ search terms with promoted listings. Promoted Closet enhances the customer journey, while also increasing visibility and sales potential for sellers.
• Revolve (#19) is another retailer with revenues around the billion dollar mark at $1.1 billion. Revolve sold AI-designed clothing on its website through a partnership with AI Fashion Week. The retailer showcased three winning collections created using AI image generators, such as Midjourney and Stable Diffusion.
• Williams-Sonoma’s (#92) "gift-finder chatbot" asks customers about the gift recipient’s age, occasion and price range, then suggests personalized gifts. These suggestions appear as cards or a carousel on Google Assistant.
• E.l.f. Cosmetics (#44) enhances its digital marketing and creative strategies utilizing AI/ML to generate immersive and interactive content for virtual stores and digital campaigns. 
• Small to mid-size retailers also demonstrate financial commitment to AI, often focusing on specific use cases that provide high returns on investment, such as solutions that enhance product discovery and elevate how the customer interacts with the brand or retailer.
• Top retailers and brands on the Index were often announcing and celebrating AI initiative stories in the media via press releases and interviews, such as Target (#7) when it launched its gen AI-powered chatbot, Store Companion.

Highlighted stats include:

• The market size of AI in retail is expected to grow from $7.3 billion in 2023 to $29.45 billion in 2028 at a compound annual growth rate of 32.17%.
• China leads in AI adoption, with 58% of companies having deployed AI. 
• In the U.S., 25% of companies have deployed AI and 43% are exploring its potential applications. 
• By 2025, 80% of retail executives expect their companies will use intelligent automation technologies. 
  • 40% already use some form of it. 
  • Despite the increased adoption, 49% of retail industry leaders feel that AI adoption is progressing at a pace they consider faster than ideal. 
• AI impacts shopping experiences off the web, as well. Over 60% of retailers affirmed that adopting AI in their stores enables them to meet customer service expectations.
• Interestingly, consumers are currently favoring AI in some customer service functions. 74% of customers prefer chatbots over human corporate agents, when being used to solve their queries. 

Methodology

Lily AI selected retailers based on criteria including revenue size, category focus and geographic focus. Benchmarking parameters included an evaluation of each retailer across four dimensions: talent/operations, company/financial, technical and news/media.