Major U.S. retail companies have revealed bold strategies to ramp up artificial intelligence (AI) integration over the coming years, with goals to optimize operations, reinforce supply chains, and offer a more personalized experience to customers.
Retail Sector Embeds AI at the Strategic Level
Throughout recent second quarter earnings updates, prominent retailers—including Gap, Dollar General, Ulta Beauty, and Kohl’s—shared details about their expanding AI initiatives and set out future plans. Increasing reliance on AI is expected to be a defining trend in the retail sector in the latter half of 2026, with key applications spanning from customer interaction to inventory oversight.
During its Q2 2026 earnings call on August 27, Ulta Beauty’s President and CEO, Kecia Steelman, outlined the company’s “early stages of applying AI across key corporate uses,” emphasizing efforts that target greater productivity and efficiency. Steelman’s comments pointed to an expectation of incremental value as these technologies mature within Ulta’s operations.
To further its technology agenda, Ulta Beauty brought on Kelly Garcia as CTO in July. Garcia’s leadership will drive the Ulta Beauty Unleashed strategy, with a special focus on scaling AI adoption and updating foundational systems—an initiative mirrored by several sector peers.
Focus Areas: Supply Chain, Customer Interactions, and Process Efficiency
The pressures of increasing customer expectations and persistent economic challenges, including rising grocery and gas costs, are prompting retailers to step up technology investment. As Aaron Cheris, Bain & Co.’s global retail practice head, noted, companies now face a basic expectation: “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.”
Instead of a wholesale shift to being “AI-first,” most retailers are strategically targeting specific business segments. Distinct examples include Walmart’s Sparky commerce agent and Home Depot’s Magic Apron AI shopping tool, which are designed to enhance the shopper’s journey rather than transform entire organizations overnight.
Optimizing internal operations with AI is another major priority, especially in relation to supply chain efficiency and cost management. Gap Inc. projected $650 million in capital expenditures this year to support new store openings, remodeling, tech development, and supply chain improvements, as discussed in its second quarter earnings call. Ulta, meanwhile, has harnessed AI tools for sourcing and automation, aiming to accelerate and improve omnichannel inventory capabilities.
The influence of AI is spreading into areas such as search, discovery, and digital content generation. Ulta has made use of AI platforms like ChatGPT and introduced its own AI-powered shopping tool, Ulta AI. At Kohl’s, CEO Michael Bender commented on the retailer’s AI shopping assistant during the August 26 earnings call, noting its positive effects on conversion rates and revenue per customer visit.
Dollar General’s CEO, Todd Vasos, described on the company’s August 27 second quarter call the building of “agentic operating systems” designed to raise organization-wide productivity. A clear sign of momentum, Dollar General’s net sales surged 5.2% year-over-year to $11.3 billion in the most recent quarter.
AI Becomes Integral to Shopping and Operations
As AI takes on a greater presence in retail, both customers and employees are more frequently engaging with smart systems in store and online. Shoppers benefit from enhanced personalization via targeted marketing, better website recommendations, and store associates who are now equipped with analytic insights. Despite the sophistication of these changes, many AI-driven improvements remain largely invisible to the public; as Cheris observed, shoppers simply feel the experience is now “really smart,” without always realizing the role of AI.
Anticipate greater adoption of AI-powered customer support chatbots, advanced shopping assistants, and behind-the-scenes optimization software as the retail landscape evolves. The movement toward scalable, targeted AI applications underscores an industry-wide response to both immediate challenges and sustained shifts in consumer behavior and business needs.