How Fashion Should Think About AI
Navigating the promise and peril of an AI future in the fashion industry.
Artificial intelligence is big, scary, exciting and more than just a little undefined.
Its promise encompasses almost everything. A world of abundance and ease? Sure. The end of civilization? Maybe.
Even the more likely middle ground could be profoundly transformative for the fashion industry as designers, store managers, lawyers, truck drivers and more all negotiate work life with — what? — AI colleagues?
The language to describe this future doesn’t exist and so it’s all still so hard to fathom.
But there are some signs suggesting what comes next, history that’s instructive and many, many questions that together offer a starting point, perspective on where AI is today and where it’s going. Get your thinking cap on.
The Latest Revolution
Big, transformative and technologically driven change is something the world has been living through for 250 years.
The McKinsey Global Institute recently drew a line from the development of steam power in the 1770s to electricity in the 1880s, computers in the 1970s, the internet in the 1990s and, finally, AI today.
“General-purpose technologies can transform economies and improve lives, but realizing their full potential takes more than the invention itself. It requires complementary innovation, new infrastructure, new rules, capital and people and organizations willing to change how they work,” McKinsey said in a recent report on the AI economy.
It took 100 years for steam to hit its peak share of per capita GDP growth of 30 percent. Electricity hit 10 percent of GDP after 40 years. And computers and the internet together topped out at 50 percent of economic growth.
“The first uses of major new technologies are rarely the most consequential,” the consultancy said. “Electricity began as a replacement for gas lighting before transforming industries and enabling entirely new forms of economic activity. AI may likewise give rise to new products, businesses and markets that are difficult to anticipate today.
“Using the technology to automate existing work is a first step, but leaders should use the resources freed up to build new sources of growth,” the report said.
So this is still just the beginning for AI, which, once it establishes itself more fully in the economy, could open up the way to unexpected advancements of who knows what.
Learning Lessons
The good news is, this business of wading through the messy introduction of a new, broad technology is something fashion has been figuring out for the last generation.
Many of the industry’s top executives started their work lives during the dot-com boom, saw the initial excitement, the inevitable crash and the steady rise of online adoption.
It didn’t actually go that well at first — the retail leaders of the time let Amazon elbow in and take the lion’s share of e-commerce — but lessons were learned.
“The people who missed the e-commerce boat didn’t follow the customer,” said Yang Lu, chief information and digital officer at Coach-parent Tapestry Inc. “That’s why we follow our customer.
“When I was growing up, we went to the stores, so high-level marketing used to be the key,” Lu said. “Then the computer came out, the internet came out, all of a sudden the product discovery happened with browsers. So following the customers…we need to show up online. Then social media reshaped everything. Kids discover products through Instagram and TikTok.”
Spinning that trend forward into an AI world is easy.
“The latest Adobe research actually says 40 percent of people shop using some kind of AI tool and traffic coming to our site through AI tools has a 48 percent higher dwell time on the site,” she said.
That makes AI a vital connector to the consumer, even if it’s still too early to tell how the technology will develop.
Lu recently met with a group of students and told them that, as future leaders, the responsibility for managing this evolution might well be on them.
“The government right now has not figured out really how to regulate [AI],” she said. “Governance is key. Governance is enablement. How do we put the right guardrails, governance, ethics [on it]? There’s so much work to be done there.
“There’s so much anxiety out there,” she said. “I think that’s why as a business we’re so intentional and focused that we’re not going to do AI for the AI’s sake. We’re always going to start with our customers and follow our customer and use AI intentionally.”
That means getting smart about AEO — agentic engine optimization — and focusing on first-party content, third-party content, technology and measurement.
“We’re actually putting a lot of content out again,” Lu said. “For example, content on how do you take care of your leather?”
That’s because AI will give a deep dive into leather care more credit than a small product description or brief explanation.
In the end, she said it comes down to how humans are using the technology.
“People are our competitive advantage,” Lu said. “Our culture is to test, learn, iterate — innovation is experimentation. And by the way, we’re OK with failure because it’s an important step for learning.”
The New Luddites
Even if people — fingers crossed — remain an engine of change in the AI world, there are persistent worries about how the human equation will change with machines taking on more of the cognitive load.
“There are folks out there who are desiring a massive slowdown, a sort of a Luddite movement where, ‘Hey, we’re playing with fire here. We really need to reverse course,’” said Marc Palatucci, who leads Future Today Strategy Group’s fashion, apparel and luxury practice. “And I don’t think they’re wrong that there are massive risks, in some cases, extreme cases, existential risks, but I truly believe that the trajectory is irreversible. I think it is that we can adjust the course, but we cannot un-ring the bell.”
AI is here to stay. It’s actually been here for a while.
“We’ve been interacting with it and reaping some benefits of it arguably for decades,” Palatucci said. “It was Netflix telling us what to watch next or Google knowing how to finish your search query.
“What I recommend to both family and friends and to clients is curiosity,” he said. “Get your hands dirty, roll up your sleeves, see what this is all about. I have friends who say, ‘Well, I won’t use it because I don’t like the guys who are in charge of the companies. I think it’s heading us down a dark road. I don’t want to give them my data.’ I respect that, but I respectfully suggest that those folks, if they think it’s an enemy, know your enemy.”
Peering into his well-polished crystal ball, Palatucci pointed to the importance of AI’s potential to jump from the screen to the physical world.
“Where the industrial revolution allowed productivity to scale, this physical AI revolution, if we can call it that, is going to allow intelligence to scale,” he said. “So the factory itself is going to learn as it produces, rather than having a human come in and say, ‘Well, what if we tweak this one gear?’”
Taking the human out of the equation has consequences.
“The question is, ‘What else do we do?’” Palatucci said. “This comes down to the existential question of the purpose of being on the planet. A lot of folks do agree that being occupied is a critical component to happiness and self-worth.”
There are very prominent worries about what people will do in the AI future, but Palatucci said the regular old economy will help regulate the change.
“The system that we’ve got in place — which is not going to be overturned overnight, even if AI does disrupt it all — relies on money changing hands and money being spent,” he said. “I don’t have much fear of widespread bankruptcy among the average citizen because the system won’t allow for it.”
The Sooner or Later Financial Disruption
AI is bound to disrupt work in one way or another.
For now fashion companies are inching closer to being able to grow their businesses with the same workforce than outright replacing large groups of employees with robots.
But the first financial fallout of AI might not be in payrolls.
McKinsey estimated that global investment in data centers will total $7 trillion between 2025 and 2030, much of it driven by AI. More than 40 percent of that is expected in the U.S.
This year alone, U.S. imports of AI-related goods are on track to hit about $750 billion or, as the consultancy said, “about as much as its imports of cars, oil and gas, and pharmaceuticals combined.”
That’s a level of spending that suggests an ever-growing increase in the value and benefits of AI that might not materialize.
“The financial projections on AI, I think are delusional,” said Jonathan Low, a partner at the Predictiv consultancy who specializes in the financial impact of intangibles. “Every human on Earth plus the residents of several other solar systems would all have to be buying AI at a premium to support these growth projections.
“The question to me is, given the degree to which AI is propelling the economy right now: Is the enhancement of productivity and efficiency going to be sufficient to overcome what I assume will be a politely called correction at some point when it becomes evident that we’re not all going to be billionaires,” Low said.
“The cost of implementation of AI is going to be much greater than anyone is willing to admit, and it’s going to take time and it’s going to be disruptive,” he said. “And as a result, companies are not going to realize the profits or ancillary benefits as quickly as they were led to believe they would. That’s not necessarily a bad thing. It just means that we’re kind of in over-hype mode right now.”
And there’s hype on both sides of AI — the extravagant spending and the very public concerns from industry leaders that rogue agents will disable power grids or spark the next pandemic with an engineered superbug.
“This whole extinction conversation has maybe gotten a little crazy,” Low said. “Is it in the realm of possibility? I guess it must be because some very smart people are saying it is. But to me, the more immediate threat is, is this all going to collapse because nobody’s really making money from this right now.”
Too Much
When Katie Thomas, who leads the Kearney Consumer Institute, pulled together a recent snapshot on how consumers will evolve over the next decade, she called it, “The Tyranny of Too Much: The Future Consumer.”
“Consumers are both products and architects of a shared personal, collective and commercial environment,” the report said. “Over decades, the push for greater choice, convenience and personalization has created a world in which options, inputs, tasks and interactions continue to compound faster than consumers’ capacity to navigate them. And AI is only adding to that compounding effect.”
Value lies instead in “reducing the effort required to navigate emotional, physical and mental overload while consistently delivering outcomes consumers can verifiably trust,” the report found.
If shopping has become a little too much for consumers, it’s not because they’re running out of time.
“I estimated that in the last 10 years, about 40 minutes a day were freed up due to automation and other things, but that looking forward 10 years, it’ll be about 80 minutes,” Thomas said in an interview. “That’s not time that’s immediately reabsorbed. If you and I are saving time with AI at work, but we’re still just working, it’s not bad. It’s that people actually, believe it or not, are working a little bit less. Work weeks are getting a little bit shorter. In the last 10 years, most of that free time went into streaming and scrolling.”
To cut through, Thomas advises that brands refocus on their core mission.
“When you think about trust, trust is built through consistent experiences with the brands,” she said. “We’ve seen a shift from trust in the [brand] to trust in the outcome and the actual performance [of the products]. We were already on this trajectory when you think of reviews, but even the average consumer knows now that those are a bit manipulated. So it’s really going back to literal outcome and experience with the product, which can only be achieved by delivering on the core.”
Kearney estimated that by 2036, $20 trillion in consumer spending will be up for grabs due to “trust failures.”
“Traditionally seen as impeccable sources of authority and trust, mass brands have always benefited from consumer inertia — the shopper perception that finding alternatives to the brands they purchase is just too much effort,” the report said.
In the future, inertia will not be enough.
Skeptics All Around
What will fly and what won’t in the age of AI is still an open question.
But many aren’t waiting for all those changes to come to pass before raising the alarm.
Public policy advocate Groundwork Collaborative recently dug into work going on at the evermore digital Walmart Inc. and tried to glimpse what’s on the way.
The group’s report reads like sci-fi.
“Walmart can tell your favorite Ben & Jerry’s flavor by seeing which one makes your heart race,” Groundwork Collaborative said. “One patent application details an invasive system to determine user preferences. First, customers would be tracked within the store using facial recognition on store cameras, drones flying around the store or cell phone signals when you’re connected to the store’s Wi-Fi.
“Then, data from heart rate and glucose monitors could reveal how customers feel about ice cream flavors,” the group claimed.
A less dramatic example in the report claimed Walmart’s patent for “dynamic pricing systems and methods” would help it change prices from customer to customer.
“Walmart executives can claim that they don’t personalize prices, but they’re spending considerable resources to develop technology that would do just that,” Groundwork Collaborative said. “Corporations do not spend the time and money, or hire highly specialized staff, to develop and patent technology only to file it away on a hard drive never to enter a store or be coded into the back end of a website.”
Walmart pushed back, with Dan Bartlett, executive vice president, corporate affairs, reminding everyone: “A patent describes an invention and potential capabilities. It does not mean that Walmart has deployed a capability, used it with customers or decided to do so in the future. Those conclusions require evidence beyond a patent.”
And John Furner, president and CEO of Walmart, has vowed to stick to its pricing practices.
“We don’t set different prices based on who you are or the time of day, and we won’t,” he said last month. “Your income, shopping history, urgency or what we think you could pay won’t change the price. We’ll hold our shopping tools to the same promise.
“We won’t use the information you share with us on [AI shopping agent] Sparky or otherwise to raise your price or hide lower-priced options that meet your needs,” he said.
Taken All Together
The tools to build a new future exist or are being made today.
Guessing exactly what they will be used to build — or will build themselves — is a fool’s errand.
Fashion, retail, the consumer, everything will be touched.
People weaving in and out between all the change will have to decide just what these new powers are, how they can and should be put to work and where they themselves fit into it all.
The surprise ending might be that, just as computers become more able to think, it’s becoming more important for flesh and blood people to take it in and think about it all themselves.
