Within the retail industry, businesses and executives are quickly shifting from establishing Generative AI (Gen AI) use cases to implementing them and driving measurable value.  

This momentum is more than just a passing trend; it reflects continued differentiation between retailers today. According to an NVIDIA survey of global retail and CPG executives, 80% of companies report they are either adopting or piloting Generative AI projects.  

Some of the world’s leading brands, such as Sephora, Estée Lauder, and Home Depot, are already finding innovative ways to implement Gen AI for their business goals. They’re using it to enhance customer engagement, empower employees with expert-level knowledge, and streamline back-end operations. Gen AI is quickly emerging as a non-negotiable capability, and these retailers are shaping the next era of customer expectations and operational efficiency. Below, we’ll unpack the impact of Generative AI in retail across a business and share examples of how retailers have leveraged Gen AI in three distinct ways.

Impact of of Generative AI in Retail 

What’s unique about Gen AI’s role in retail is how its impact can span across three interconnected layers of the business:  

• Direct Customer Engagement: Gen AI insights are the foundation for personalized product recommendations and interactive shopping experiences – as seen with Sephora’s use of their skin analysis tool 
• Behind-the-Scenes Operations: Gen AI enables automation of content creation and acceleration of product design cycles through trend-driven design – such as Estée Lauder’s use of Gen AI to streamline campaign development 
• Employee and Customer Interactions: Gen AI equips all employees and virtual assistants with expert-level product knowledge alongside real-time insights – a capability that Home Depot has deployed to strengthen in-store support for employees 

Together, these layers show how GenAI is being woven into all parts of the retail industry, driving customer impact and operational improvements. 

Gen AI in Action: Sephora, Estée Lauder, Home Depot

Below, we dive deeper into how retailers are using Gen AI in these three layers today: 

Sephora: Hyper-Personalized Skincare with Smart Skin Scan 

Sephora built a virtual skin analysis tool into its mobile app, allowing shoppers to complete a scan of their face and receive real-time skin analysis. The scan identifies characteristics built around seven categories, including uneven texture and blemishes. After completing the analysis, customers are given a customized four-step skincare routine tailored to their best results. The tool was built using 70,000 medical-grade images, helping it achieve a 95% test–retest reliability rate in identifying solutions for the seven different skin concerns. 

The Smart Skin Scan’s ability to recommend a skincare routine can give shoppers greater confidence in their purchases. Customers appreciate these tailored and efficient recommendations, as well as the convenience of accessing them from home, which drives sales conversion.  

According to the World Journal of Advanced Research and Reviews, generative AI-powered personalization drives over 2.5x higher engagement and a 31% average increase in sales conversion across retail and service organizations, compared to rule-based methods. By meeting specific customer needs, Sephora sets a clear example of how personalization can improve the customer experience and drive sales. 

Estée Lauder: Faster Creative Production with GenAI 

Estée Lauder is using Adobe’s GenAI content platform to increase the speed of creative production and ensure consistency across its 30+ brands. When launching a new fragrance, the platform can quickly generate localized versions of an ad while automatically tailoring visuals to different markets. This can eliminate hours spent on manual localization, setting the stage for faster campaign rollouts while maintaining brand consistency. These flexibility and efficiency gains make a strong case for how Gen AI can help retailers accelerate marketing efforts across the globe. 

Gen AI is proving that it can handle the diverse array of issues and challenges that global retail brands face when marketing at scale. For Estée Lauder, this has translated into efficient campaign execution, reduced marketing expenses, and the ability to maintain relevant content in global markets.  

Almost two-thirds of marketers expect content needs to increase by five times by 2026, indicating that brands must find more sustainable ways to create and maintain a global brand presence. Estée Lauder’s success shows the impact of Gen AI in the creation of global advertising to ensure the right message reaches the right audience at the right time 

The Home Depot: Supporting Store Associates with Magic Apron 

Home Depot’s “Magic Apron” is a generative AI-powered digital assistant designed specifically for store associates. Unlike a traditional inventory search tool, Magic Apron uses its generative capabilities to synthesize information from various sources. The application pulls from proprietary company data, real-time inventory data, and product details to provide associates with an all-in-one service at their fingertips. This equips them to better support customers in the moment, with more accurate answers with greater confidence. 

Associates can use this platform to generate conversational, tailored responses to customer questions in real-time. For example, the platform enables an associate to answer “what stain, brushes, and prep materials do I need to stain my deck and are they all in stock right now?” by producing a single reply that synthesizes product details and availability. 

The impact of generative AI in these frontline roles is significant. A recent study completed by Stanford and MIT found that generative AI assistants increase customer support agent productivity by an average of 14%. Home Depot’s investment in Magic Apron demonstrated how a well-executed GenAI deployment strategy can directly enhance customer interactions, helping to drive smarter, faster, and more consistent service. 

Gen AI in Retail: From Pilot to Practice 

Generative AI is becoming a critical component in the evolution of the retail industry, defining both future business models and competitive landscapes. This technology now has the capabilities to drive customer engagement, operational efficiency, and marketing innovation. Retailers that develop and refine tailored Gen AI strategies will be better positioned to adapt, innovate, and lead in a dynamic technological environment moving forward. 

If you’re interested in learning more about defining your AI strategy or developing AI use cases, reach out to us today. 

Contributions by Malik McFadden