BUSINESS
AI in the Retail Industry: Friend or Foe?
By: Grace Stecher, Senior Writer Edited by: McKenna McCormick
In the current technological climate, it is nearly impossible to function without encountering some form of artificial intelligence. Whether it's opening a phone using Face ID, typing a prompt into ChatGPT, or clicking on a targeted advertisement, artificial intelligence, or AI, is inescapable – and its presence in the fashion industry is no different.
Many consumers aren’t aware that AI is already being used behind the scenes, as fashion brands and large companies implement new technologies to target certain audiences and improve their search engines. With technology progressing so rapidly, many users don’t realize when brands’ websites use AI to optimize product searches or improve the shopping experience. Is this new ‘AI-centric’ world going to push innovation to new heights, or are shoppers losing privacy?
Whether we like it or not, AI is becoming a permanent part of the retail landscape. In 2022, the North American market for AI solutions in retail was valued at $2.2 billion, and by 2027, it is projected to exceed $18.8 billion. The increase in AI use can be partially attributed to online fashion retail platforms. These companies are constantly seeking ways to better the consumer experience, and new AI technology is helping them achieve that goal.
In an interview with Vogue Business, Maximilian Bittner, CEO of the pre-owned luxury fashion platform Vestiaire Collective, stated, “Optimizing our search capabilities and personalisation, and the way we rank products to make sure the right people find the right products, is among the top challenges and opportunities we see with the business.”
New AI tools are helping companies like Vestiaire Collective do just this by streamlining their product search results. By using AI, the Vestiaire Collective’s search engine can easily interpret users’ keyword searches and provide them with more relevant results. As a platform selling luxury secondhand items, Vestiaire Collective users are often shopping for specific vintage pieces, but only know visual keywords to be able to search for them. The addition of AI product search is a huge benefit to both consumers and sellers, making it much easier for shoppers to find desired items through visual descriptions, increasing total sales.
Artificial intelligence isn't only being used to help customers. In the past year, eBay introduced new generative AI technologies to its website to aid the selling process. The “magical listing” feature allows eBay sellers to upload a photo of their product and let generative AI write the product description, recommend pricing and shipping costs, and even change the photo’s background to better appeal to possible buyers. According to eBay’s website, this new feature was successful, as “over 95% of those who tried it opted to use the AI-generated descriptions.”
However, not all new AI technology is met with the same positive feedback. The online personal styling service Stitch Fix has been using artificial intelligence algorithms for the past few years to interpret user’s descriptions more accurately. According to the Stitch Fix website, their customers fill out a quiz detailing their clothing preferences, pay a $20 styling fee to cover the stylist’s “expertise and time,” and then receive a box of specially selected clothing that they can then choose to purchase or send back. After clients provide feedback about their desired clothing fit and style in the form of the styling quiz, OpenAI’s GPT-4 algorithm interprets their requests and provides Stitch Fix’s human stylists with clothing recommendations. Stitch Fix says, “This enables stylists to easily curate pieces for the Fix instead of manually sorting through the thousands of pieces in our inventory.”
Despite Stitch Fix’s claim that it helps the styling process, their decision to use AI to generate options for their customers was met with backlash. Many customers were unhappy when they found out AI played a role in selecting their styling box because it wasn’t advertised before they paid the $20 styling fee. In 2022, Stitch Fix told its stylists to avoid referencing the AI algorithm in conversations with customers. Despite this controversy two years ago, Stitch Fix still uses AI in their styling process today and many articles have been written recently praising their system.
The development of new AI technologies is opening new doors in the retail industry and beyond. Using generative AI, online stores and marketplaces can strengthen their search engines, streamline their item listings, and increase net sales. Nevertheless, proper transparency is important to make sure all customers are aware of how their information is being processed by these AI algorithms. Encouraging open communication about artificial intelligence implementation between companies and their customers ensures safe usage as AI continues to grow and develop
