Recent research from consulting firms and analysts is showing a clear pivot of retailers apparel brands moving away from “experimental gadgets” to deeply integrated, “agentic” technologies. While previous years were defined by the hype of the Metaverse, today’s tech investments are targeted at two critical goals: creating operational resilience and frictionless hyper-personalization for shoppers.
According to recent industry data, worldwide retail technology spending is projected to reach $388 billion this year, with AI-related investments growing at an annual rate of nearly 25 percent, according to research firm Gartner and Intellias, a software engineering and technology consulting company.
“Seeing the potential to streamline business, retailers have quickly adopted AI applications. 87 percent of retailers have already deployed AI tech in at least one area of business, and 60 percent of retail companies are planning to increase spend on AI,” said authors of a research report from Smurfit Westrock. “This only makes sense as it complements the industry’s current focus on e-commerce, which is expected to grow from $6.4 trillion in total sales in 2025 to $7.9 trillion by 2028.”
So, as agentic commerce takes center stage, chatbots are stepping aside as AI agents take their place. Unlike previous versions that simply answered questions, these agents are now capable of executing transactions and managing inventory autonomously. They’ll even serve as personal shoppers.
The reason why retailers are leaning into agentic AI is because companies are prepping for zero-click transactions. Consumers now use AI assistants to find, compare and purchase apparel directly within a conversation. Brands are investing in structuring their product data specifically for these AI agents to make sure their inventory is readable and promotable without human intervention, according to research from PwC
Driven by both consumer demand and strict new regulations (particularly from the EU), apparel brands are also making investments into transparency tech.
Approximately, 74 percent of consumers are now willing to pay a premium for fully traceable items. Digital Product Passports (DPPs) allow shoppers to scan a garment to see its entire lifecycle—from raw material sourcing to its total carbon footprint. This also serves as a strategic defensive move against tightening global trade compliance rules.
Other areas of investments include the “phygital” retail experience, which is powered by AR (augmented reality) and so-called smart mirrors. The goal is to reduce the high cost of returns while driving sales.
Retailers using AR mirrors have reported conversion rate lifts of 20 percent to 42 percent. By allowing customers to “try on” clothes virtually in-store or at home, apparel brands are significantly cutting down on the logistical nightmare as well as environmental impact of returns.
Other areas of technology investment are going to creating autonomous supply chains as well as tech to help combat labor shortages and volatile shipping costs. The “back of the house” is becoming as high-tech as the front.
Retailers are using Amazon’s “Just Walk Out” and other similar technology that leverages computer vision and weight sensors. These shopping experiences are also coupled with automated inventory replenishment. This allows for real-time resource analysis, which include monitoring staff allocation and stock levels as they occur, rather than relying on end-of-day reports.
Brands that are using RFID-based “Just Walk Out” tech to track soft goods include Fanatics, University Bookstores, 7-Eleven, Circle K and Aldi, which is testing “Aldi Shop & Go” in the U.K.
Technology is no longer an “add-on” for retailers and brands, it is now the backbone of the business. The “winners” are going to be those who have moved past the pilot phase and successfully integrated these tools into their core operations to drive both profit and planet-friendly practices.
