Large retailers are using AI to overhaul customer experience, supply chain operations and customer offerings, according to Q2 earnings calls. Executives from Gap, Dollar General, Ulta Beauty and Kohl's detailed their AI roadmaps last week, signaling that the second half of 2026 will bring faster deployment of chatbots, predictive models and agentic systems across the sector.
The pressure to adopt AI is steep. "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," said Aaron Cheris, partner and global head of Bain & Co.'s retail practice, in an interview with CIO Dive.
Where retail AI investment is going
Few companies are pursuing a wholesale AI transformation, Cheris said. Most are targeting specific functions: customer experience, supply chain efficiency, or foundational data work. Home Depot's Magic Apron and Walmart's Sparky commerce agent fall into the first category, while routing optimization and inventory management projects aim to cut costs.
Gap and Ulta are both investing in supply chain AI. Gap's capital expenditure will reach $650 million this year, covering new stores, remodels, technology and supply chain investments. Ulta is using AI-powered sourcing to optimize omnichannel inventory and meet customer demand more efficiently.
Ulta President and CEO Kecia Steelman described the company's approach as deliberate. "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 during the company's Aug. 27 earnings call. "As these capabilities mature, we see opportunities to scale AI thoughtfully across the organization and deliver incremental value over time."
The beauty retailer named former Domino's executive Kelly Garcia as CTO in July, tasking him with advancing its technology capabilities and the Ulta Beauty Unleashed strategy. Ulta has spent the last few years modernizing core technology systems and scaling AI use.
Customer-facing AI shows early results
Kohl's CEO Michael Bender said the company's AI shopping assistant is producing stronger conversion and higher revenue per visit. "We see significant opportunities to expand AI-assisted discovery, gifting and purchase confidence over time," Bender said during the company's Aug. 26 earnings call.
Ulta is also applying AI to search and discovery, using content creation and enriched product information across platforms like ChatGPT. The company is promoting its on-site shopping agent, Ulta AI, alongside these efforts.
Dollar General CEO Todd Vasos said the company is building agentic operating systems for enterprisewide workflows to improve productivity. The discount retailer posted net sales of $11.3 billion for the quarter, up 5.2% year over year.
What consumers will notice
Shoppers should expect more customer service chatbots and AI-powered shopping assistants, Cheris said. Marketing emails and websites may feel more relevant as companies invest in AI-driven personalization. In-store, associates are increasingly using AI tools that provide insights into shopping habits, making interactions feel more tailored.
"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.'"
For executives tracking these developments, the pattern is clear: retail AI investment is shifting from experimentation to operational deployment. The focus areas - supply chain optimization, customer discovery, and internal workflow automation - mirror the priorities covered in AI for Executives & Strategy resources. Retail leaders evaluating their own roadmaps can benchmark against these deployments, particularly the emphasis on measurable outcomes like conversion rates and inventory efficiency. The AI for Retail Managers learning path offers practical grounding in the same application areas these companies are now scaling.
Why this matters for executives and strategy
The retail sector's Q2 disclosures show AI budgets moving toward specific, measurable use cases rather than broad experimentation. Executives should note that the companies reporting early wins - Kohl's on conversion, Dollar General on productivity - are the ones tying AI investment to concrete operational metrics. The takeaway for strategy leaders: AI initiatives need defined success criteria tied to revenue, cost, or customer behavior, not vague transformation goals. Boards and investors are asking the AI question directly. The companies with clear answers are the ones deploying tools in production and tracking results.
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