NRF review – AI increasingly impacting retail
Another New Year and another annual Retail’s Big Show, organised by the National Retail Federation (NRF), in New York City attracting senior retailers and technology providers showcasing the latest innovations in the retail sector.
The 40,000 people attending from 105 countries representing 6,200 brands at this year’s event were again almost overwhelmed by solutions extolling the capabilities of AI. But the difference this year is that the technology is genuinely impacting retail businesses whereas previously it seemed much more about the hyping of its potential capabilities.
Transformative impact
Doug Herrington, CEO of Worldwide stores at Amazon, encapsulated the thinking of many retailers with his view: “AI is becoming transformative. We’ve not had a technology revolution like this since the internet. Mobile was large and social media was also large but they were nothing like this. It’s requiring eye-opening investment but the breadth of gains makes it worthwhile.”
Never Miss a Retail Update!Against this backdrop it was interesting to see a larger presence this year from Nvidia that supplies chips and the technology platform for AI to retail as well as pretty much every other industry.
Azita Martin, VP and GM of retail and CPG at Nvidia, highlighted a variety of applications with different retailers and brands. She says Walmart is using AI for making predictions by ingesting large amounts of data and then forecasting on hundreds of millions of SKUs “Even with just one per cent better accuracy it is significant revenues,” she says.
Digital twins drive experimentation
At DIY retailer Lowe’s digital twins of its 1,700 stores have been created. “They can be updated with inventory data in order to optimise layouts and the way customers shop the stores. We can move things around on the digital twin, just like a video game, without physically having to do it,” she says.
Seemantini Godbole, chief digital and information officer at Lowe’s, says: “Our space planning leaders can mark SKUs on the twin so they can move out the low-selling items and replace them with higher sellers and visualise what that would look like. Hundreds of such experiments can be undertaken by our designers.”
The company has also deployed computer vision in its stores, which when aligned with AI can in real-time allocate staff in-store to customers that look they need assistance. “The computer vision spots them and then alerts the employee on their [personal] Zebra device.”
Computer vision will also be playing a part in Tapestry’s plans. Trang To, VP of omni-channel at Tapestry, says: “When it’s adopted it will have the ability to inform us who is in-store and where are they shopping. It will help with store design, training, and labour scheduling. It will be enormous.”
Connecting digital to physical
Ellen Svanstrom, chief digital information officer at H&M, says: “It’s all about connecting the digital assets with the physical. RFID technology could be connected to an application layer powered by AI that can then empower colleagues. It will be key linking these things. It’s low-cost tech, but it’s a game-changer for us.”
Lowe’s is empowering colleagues through a generative AI chatbot on its associate’s devices. “Using this all customer questions can be answered. We’re giving superpowers to associates. Everyone becomes an expert,” says Godbole.
There is also great excitement in Walmart for such assistants for its associates. Greg Cathey, senior VP of transportation & innovation at Walmart, says all employees have a phone and access to the company’s app. “Now that Gen AI is involved we’ve democratised data. How do you take all the knowledge in the company and give it to the associates. This is people-led technology power,” he says.
There are myriad use-cases. For instance, by taking in various data points the technology now enables managers to plan an overnight shift in under five minutes compared with an hour before. “We spend a lot of time listening to the operational team. As we build a use-case, what are the KPIs for success? We want to know the ROI but we start with the associates and NPS scores. Are we reducing friction and pain points,” says Cathey.
Within Stitch Fix AI is helping its stylists to deliver a more effective service to its customers. Tony Bacos, chief product & technology officer at Stitch Fix, says AI is used to collect the information on customers and trends as well as to prepare the notes that are given to customers to describe why each item in their ‘fix’ has been selected for them. Stitch Fix works with Stibo Systems for the management of the product information that it uses within the organisation. “We also continue to use AI to drive our assortment to ensure we have the right mix of new and favourite items,” says Bacos.
There is also a growing use of AI in the supply chain, according to Martin, who says combining digital twins with computer vision can optimise the throughput in distribution centres. “Optimising layouts is very disruptive but with AI twins you can create a warehouse and simulate layouts and see how they behave.”
AI boosting creativity
Walmart is also using Gen AI for its creative work. David Hartman, VP of creative at Walmart, is working with Adobe to better handle the volumes of advertising and marketing materials that it is creating at its new studio in Los Angeles. “The tracking and management tools has helped us handle the volumes.”
Marta Frattini, director of retail industry strategy and marketplace at Adobe, says: “With the promise of personalisation there will be five-times the demand for content. It’s mind blowing. Gen AI can address this through speed that has never been available before.”
DigitalWave was showcasing its solution in the NRF Innovators Zone that enables retailers’ creative teams to take a simple 2D photo of a product and provide some basic context of the model to be featured and other data. The solution then provides hundreds of alternative images. The retailer can then select the one they wish to use in their campaigns.
Amid all the investment going into AI there is also continued commitment by retailers to the comparatively low-tech RFID. Dean Frew, president of RFID solutions at SML, says: “We’re the boring plumbing that’s beneath AI. We’re part of the AI eco-system.”
Appetite for item-level visibility
Indicative of the growing appetite of retailers to have item-level visibility within their businesses Frew says Walmart is now RFID tagging all its products. However, currently he says only 15% of retailers use RFID technology. But he says this will change rapidly and he forecasts that within five years only 15% will not be using it. “Apparel and footwear have gone first and beauty will be next and then electronics. These are exciting times as the retail industry goes through a period of transformation.”
RFID usage has moved beyond simply being a way to see stock in an organisation to also helping retailers with their returns, click & collect, reducing shrinkage and other aspects that boost the customer experience in-store.
RFID is undoubtedly able to play an important role in the circular economy. It was noticeable that as AI took centre stage at NRF 2025 there was, in contrast, very little reference to the environment and sustainability compared with previous years.
Environmental agendas
Agata Ramallo Garcia, vice president of enterprise sustainability at Target, highlighted the company’s car seat trade-in events. Through the programme, which started in 2016, more than three million car seats have been recycled, representing nearly 45 million pounds of materials. Not only does such a solution appeal to its customers but it also brings material back into the supply chain and drives long-term value for the business.
At Walmart it is piloting a marketplace of secondhand products, starting with small appliances and electronics. Its ‘Resold at Walmart’ marketplace includes lightly used apparel, sporting goods, collectibles and other items. Jerome Del Porto, head of corporate sustainability at Walmart, says: “In less than a year, we have about five million products on that marketplace, supplied by 1,500 sellers. It allows us to give great value to the customers, and a second life for products that can still be very useful to many.”
Meanwhile IKEA reaffirmed its aim of developing products with circular capabilities and its goal of being 100% circular by 2030. Mardi Ditze, sustainability manager at IKEA US, says: “This is the long game. This is not a sprint. In this marathon that we call circularity, we need infrastructure. We need partners. But there’s also this component that I think that we’re missing around the business model. There is business to be made in the circularity industry. We will need more supply. We’ll have to think about supply differently. We’ll have to have innovative solutions.”
Pioneering circularity
A pioneer in the circular economy is Jennifer Hyman, CEO & co-founder of Rent the Runway, who says the business has been celebrating its 15-year anniversary: “We pioneered the closet-in-the-cloud. We made it feel normal to wear clothing other women had worn before. It’s now entirely normal to buy second-hand, subscriptions, and rental. Brands now recognise second-hand could be additional sales.”
This scenario has changed the relationship the company has with the 1,000 brands that it makes available to customers on Rent the Runway. Fifteen years ago she says no one wanted to work with the company but it has shown that 98% of customers rent brands they don’t own and that it’s their first time with the brand. As many as 80% of customers convert to full-price customers. This has led to Rent the Runway having 50% of its inventory not bought at a fixed price but paid for purely on performance. The number of rentals determines the price that is paid to the brand owner.
For the industry to grow further Hyman says people need to think about their ‘closet value’. She can foresee the scenario involving the product page provided by retailers including information such as a buy-back price within a certain time-frame, the price it would command as a rental item, and a lease value.
Tapping into FOMO
Another additional information item – on websites – that is growing in popularity is social proof. This involves including data on the demand for an item. The objective is to prompt conversion by tapping into FOMO. Dan Finley, CEO of Boohoo, says the company has been an early adopter of this mechanic and uses the Taggstar solution.
“Our consumers are at the forefront of the social media generation. What’s super important to them is what other people are buying. It’s a validation to consumers of the product. It’s a quick and easy ROI for the company,” he says.
Kim Miller, president of Saks OFF 5th, says she is a newcomer to social proof but they have quickly found that “FOMO is alive and well”. “We like to re-iterate that say five items are left and 34 people are looking at them. We believe this trend will continue. Taggstar serves a great function and really helps us drive conversion.”
