Retailers turn to AI for smarter supply chains

Retailers are accelerating their adoption of AI for supply chain management and customer-facing tools in the second half of 2026. Executives from major chains including Gap, Dollar General, Ulta Beauty, and Kohl’s have outlined these strategies during recent earnings calls. The focus is on integrating chatbots, predictive models, and agentic AI systems to boost efficiency. These leaders describe the technology as both a short-term operational fix and a long-term strategic asset for internal workflows and customer interactions.

Leadership shifts and strategic focus

Ulta Beauty recently named former Domino’s executive Kelly Garcia as its new Chief Technology Officer in July. He will continue to drive the company’s technology capabilities under its Ulta Beauty Unleashed strategy. This appointment signals a broader industry trend toward modernizing core systems and scaling AI usage over the last few years. Such technological upgrades have become a priority for several businesses across the sector.

Kecia Steelman, Ulta’s President and CEO, addressed the company’s approach during the Q2 earnings call on Aug. 27. “We’re in the early stages of applying AI across key corporate uses to enhance how we work, improve productivity and drive greater efficiency,” she said. Steelman noted that as these capabilities mature, the organization sees opportunities to scale AI thoughtfully. The goal is to deliver incremental value over time across the enterprise.

The pressure to adopt

Retailers are turning to AI as they scramble to win over consumers who have become choosy about how they spend their money. Rising gas and grocery prices have tightened household budgets, increasing the pressure on retailers to offer better value and convenience. Aaron Cheris, partner and global head of Bain & Co.’s retail practice, said the pressure to use AI is steep for industry leaders.

“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 reporters at CIO Dive. Few companies seek out a big AI transformation with the desire to be an “AI-first company,” he noted. Instead, most fit into the category of overhauling specific aspects of the business, such as the customer experience. This targeted approach allows firms to manage risk while still gaining competitive advantages in their respective markets.

Tools like Home Depot’s generative AI shopping tool Magic Apron or Walmart’s commerce agent Sparky stand out as examples of this approach. Other companies use AI to simplify operations or lower costs through supply chain management and routing optimization. Still others invest in foundational data work to make business operations run more smoothly. The variety of applications reflects the different operational needs and market positions of major retail players.

Supply chain and operational gains

Gap Inc. and Ulta are both pursuing AI projects related to supply chain management, according to their earnings calls. Gap Inc.’s capital expenditure is expected to reach $650 million this year. This budget covers new stores, remodels, technology, and supply chain investments. The significant capital outlay highlights the scale of infrastructure changes underway in the retail sector.

Steelman said during Ulta’s call that the company 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. This allows them to meet customer demand more efficiently. The organization is also turning to AI for search and discovery, using content creation and enriched product information across AI platforms like ChatGPT. They are also promoting the company’s on-site shopping agent, Ulta AI.

For many shoppers, the tangible benefits of these backend improvements will be subtle but noticeable. If supply chains run more smoothly due to predictive AI models, the result is likely to be fewer out-of-stock items and faster delivery times. This practical outcome helps bridge the gap between complex technical implementations and the simple desire for reliable product availability. It turns abstract data processing into concrete retail reliability.

Customer-facing AI assistants

Michael Bender, CEO of Kohl’s, said during the company’s Aug. 26 earnings call that he is encouraged by early signs of the store’s AI shopping assistant. The tool 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. The company is still early in its AI journey but sees clear potential for growth through these digital tools.

Todd Vasos, CEO of Dollar General, discussed the company’s strategy during the Aug. 27 earnings call for the second quarter of its 2027 fiscal year. He stated 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. This financial performance provides a backdrop for their continued investment in operational efficiency.

Consumers will see these AI investments in the form of more customer service chatbots and AI-powered shopping assistants. Shopping may feel more personalized, with emails and websites appearing more relevant due to AI marketing and supply chain strategies. In-store shopping might also feel more tailored as human associates use AI tools that provide insights to shopping habits.