Stitch Fix has been using artificial intelligence since before it was cool—years before the onset of the AI fever dream sweeping retail today.

The styling service uses various forms of AI, including natural language processing, to not only personalize recommendations, but to make seasonal forecasts, assign warehouses for fulfillment, and inform purchasing decisions, to name just a few.

It’s this top-to-bottom approach to AI that Chief Technology Officer Sachin Dhawan says sets Stitch Fix apart from the rest of the retail industry.

“We’ve exceeded 4.5 billion textual data points that we have from customers,” Dhawan explained. “4.5 billion elements that we have is more than all of Wikipedia, as an example, it’s a very large corpus of data.”

And the type of data Stitch Fix collects is more detailed than the average retail brand or store, he added.

“If you look at even the biggest retailers out there…what they know about their customers compared to what Stitch Fix is able to learn about our customers in the first few days of onboarding is night and day different,” he said.

Data makes the world go round

Dhawan said Stitch Fix’s main algorithm predicts “probability of sale” by scoring each SKU based on the likelihood that an individual shopper will purchase it.

That model is fed new data every day, based on customer responses to Stitch Fix’s Style Shuffle (where they can give a thumbs up or down to a carousel of items), written feedback, and images that customers engage with elsewhere, like on Pinterest, Dhawan said.

But there’s another important element in Stitch Fix’s recommendation models: the human element.

Keep reading here.—MA

Spring has officially sprung, which means it’s time for growth—or at least that’s what the National Retail Federation is predicting for 2023.

NRF issued its annual retail sales forecast last week, which predicts growth between 4% and 6% this year. This would translate to between $5.13 trillion and $5.23 trillion in sales.

Although inflation has come down from its 2022 peak, retailers are still remaining vigilant to shoppers’ spending habits. This is apparent for Gap Inc. and Rent the Runway, whose latest earnings reports made it clear that shoppers are paying close attention to their wallets but are still willing to spend in some areas than others.

• NRF predicts inflation will remain between 3% and 3.5% for all goods and services this year.

“It seems like [consumers] are shopping more strategically…they’re very rational,” Horacio Barbeito, president and CEO of Old Navy—which is owned by Gap—said during NRF’s State of the Consumer presentation last week. “They’re more focused on buying what they need versus what they would like.”

Oopsy‑Navy: The fourth quarter was tough for Gap Inc., as net sales of $4.24 billion were down 6% YoY and comparable sales declined 5%. The company said Old Navy’s lackluster performance was due to “demand softness” from lower-income consumers and in the kids and baby categories. It did say, however, sales in women’s apparel helped offset this a bit.

• However, Barbeito is optimistic about what he views as an improving global supply chain. Last year, Old Navy moved excess inventory, which helped regulate the company’s assortment balance.

“Obviously, we’re not in the situation that we were in 24 months ago. Nevertheless, I think this represents a great opportunity…to really invest in the supply chain to make sure that it is made even more resilient,” he said.

Keep reading here.—KM

Between Web3, the metaverse, and artificial intelligence, the retail world is committed to experimenting with emerging technologies.

Here are some of the most interesting, surprising, and notable retail experiments with emerging technology from March 2023:

Panera Bread began rolling out Amazon’s palm-scanning technology, Amazon One, for contactless payment for loyalty members in-store in St. Louis. According to the brand, touchless checkout will bring a more personalized experience to its members, including personalized recommendations and first-name greetings.

Instacart announced the creation of a plugin with OpenAI’s ChatGPT, which will allow customers to shop from recipes or lists using the chatbot. “Ask Instacart” is expected to be fully rolled out later this year, and will pull data on more than 1.5 million products (stocked by 75,000 grocery stores) in Instacart’s network.

Keep reading here.—MA

Today’s top retail reads.

Kids these days: Gen Z is obsessed with TikTok. And on TikTok, they’re obsessed with one retailer in particular: Target. Here’s how “Tarjay” is winning the battle for generational loyalty. (Fast Company)

Worth their salt: A look at how undercover union organizers—called “salts”—working as Starbucks employees around the country have helped propel a “once-in-a-generation wave of unionizing.” (Bloomberg Businessweek)

Hairbots: Consumer goods giant Unilever is using AI-powered robotics in its product development processes, including a hair-washing robot named Shirley. (Glossy)

A roundup of our favorite retail content from across social platforms this week—from TikTok to Twitter. We’re keeping you hip, and you’re welcome.

Make your day: Branding expert Ashwinn Krishnaswamy breaks down the design transformation of Van Leeuwen Ice Cream’s packaging, from “all over the place” to sleek and simple. (@Shwinnabego on TikTok)

RT: AI consultant Kris Kashtanova shared the prompt they used to create AI-generated retail stores, after being approached by brands who were curious about where to add AI into their workflow. (Kris Kashtanova on Twitter)

Tune in: Recently instated Movado president and SVP of e-commerce Margot Grinberg describes her trajectory in the world of luxury watches, which is a family business. (Women in Retail Talks on Spotify)

Link up: TikTok influencer Corporate Natalie chatted with Marketing Brew’s Katie Hicks about what she looks for in a brand partnership. (Natalie Marshall on LinkedIn)

Video jockey: Pinterest CEO Bill Reddy was at ShopTalk 2023, and talked about making the platform more shoppable, plus the impact of a potential TikTok ban. (Yahoo Finance on YouTube)

Catch up on the Retail Brew stories you may have missed.

• Mid-range office wear is on its way out
• The future of DTC brands
• Retail exec moves to know from March