Dive Brief:
- Williams-Sonoma is turning to AI to drive savings and reduce the need to hire additional workers this year, executives said Wednesday during the company’s Q4 2024 earnings call. The West Elm and Pottery Barn parent company did not immediately respond to a request for comment.
- "We believe we'll be a leader in the use of AI in our operations and in our industry and that AI will be a key component in driving record sales and margin,” said President and CEO Laura Alber. “We will be tight on employment in 2025 with a focus on using AI to offset headcount growth.”
- While still in the early stages of adoption, CFO Jeff Howie said the company is also embedding AI in call centers and back-office operations to boost savings. Other use cases include creating customized homepages and optimizing sales and delivery speed.
Dive Insight:
Retailers are trying to hit their stride with AI, deciding which use cases to prioritize and how to move adoption forward. At the same time, the industry is grappling with uncertainty amid a barrage of tariff changes by the Trump administration and consumer spending pullbacks.
Using AI to cushion against potential headwinds by unlocking efficiencies and driving savings will likely rise in importance as the volatility persists. Around 3 in 5 retail companies have deployed AI to prevent theft, fraud and operational errors, with another 30% planning to do so in the next 12 months, according to an Everseen report published last month.
Gap is scouting avenues where AI can boost its revenue, including CX and productivity enhancements, executives said this month. Colgate-Palmolive is pursuing AI in revenue growth management practices to trim unnecessary costs. Toymaker Mattel is exploring how AI applications could support its cost-saving initiative.
While ROI isn’t guaranteed, some companies are already tying their AI progress to tangible results.
During an investor call in January, Charles Schwab credited increased employee use of AI with driving down costs. General Mills attributed millions in cost savings to its AI initiatives, which helped boost efficiency and optimize its supply chain, executives said during an investor call last month.
Most businesses that have yet to reach ROI from their AI initiatives expect to realize cost savings in the next three years, with around 44% anticipating a quicker turn, according to an IBM report.
But first, retailers will have to address adoption and implementation roadblocks. Retail executives most often point to the time and resources needed for training, a dearth of customer trust and difficulty integrating with existing systems as key hurdles, the Everseen report found.
