Retail + Artificial Intelligence- explained through a case study on Levi Strauss.
Walk into any mall in the UAE and one thing you will notice across all the stores i.e. Promotional messages, Part Sales, discounts etc.
Currently, it is estimated that a middle eastern retailer runs promo campaigns and Part Sales campaigns almost 180-200 days in a year.
This has brought tremendous change in consumer’s buying preferences as most of the consumers today have become “Bargain/Discount seekers”.
Add to this the floating population of tourists visiting the country, they too find the malls as “Shoppers Paradise” as most of the retailers are on discounts.
It reminds of my early days in retail in 2000’s wherein we had only 2-3 Sales per annum even though our assortment mix was approx. 2000-3000 skus (fashion store);
It was important for us to sell item in full margins for major part of the product lifecycle.
Have you ever wondered as to why retailers are depending upon Promotions more than past years?
The answer lies in the gaps in Merchandising strategy.
Promotions are the easy way to sell-out.
Today with the advent of Artificial Intelligence, things will be getting better with regards to advance Predictive sales analytics, trend forecasting and like for like analysis.
Retailers are increasingly leveraging AI to transform their store operations, optimize customer experiences, and boost profitability in 2025.
This article talks about a brand Levi Strauss which has successfully implemented AI tools in their business in the below areas of pain points.
To learn about Private label in hypermarkets, click here
Pre AI in retail-pain-points for retailers
Pain Points
- Inventory Inefficiency:
Traditional forecasting methods led to surplus stock or out-of-stocks, eroding margins and missing customer expectations.
- Manual, Slow Planning Cycles:
Siloed and outdated data made proactive decision-making almost impossible, resulting in slow adaptation to trends and market volatility.
- High Return Rates and Poor Fit Experience Online:
Uncertainty around sizing especially in digital channels caused high returns, reduced conversions, and lower satisfaction.
AI in Retail: Key Areas of Impact
AI has become a central tool for retailers across several critical domains:
- Personalized Shopping Experiences: AI algorithms analyze customer data to suggest products, tailor discounts, and offer bespoke interactions, driving loyalty and increasing average order value.
- Inventory and Demand Forecasting: Predictive analytics factor in seasonality, events, and even weather, enabling stores to match stock levels to real-world demand—helping prevent both overstock and out-of-stock issues.
- Dynamic Pricing: AI systems monitor competitors and customer demand in real time, allowing for rapid price adjustments that keep retailers competitive and profitable.
- Merchandising Optimization: Computer vision and heat-mapping let stores analyze shopper behavior and optimize product layouts for maximum engagement.
- Trend Forecasting: By mining shopper data and external trends, AI forecasts what products will be in demand, helping retailers stay ahead of shifts in consumer behavior.
To learn about Artificial Intelligence in Fragrance sector, click here
Case Study: Levi Strauss.
- In-Store Experience Innovations: AI-powered agents, AR/VR fitting rooms, smart mirrors, and IoT sensors streamline shopping and provide immersive experiences.
- Security and Loss Prevention: Computer vision and analytics detect theft and fraud patterns, while automating surveillance to reduce shrinkage.
- Customer Insights and Segmentation: AI models reveal deep behavioral patterns, empowering retailers to design precisely targeted campaigns, improving ROI.
After adopting AI-powered predictive analytics, virtual try-ons, and personalized recommendation engines, Levi Strauss saw substantial improvements across multiple business metrics:
- Forecasting Accuracy and Inventory Optimization: AI-driven models produced double-digit percent improvements in demand forecasting, enabling better stock availability and notably reducing both excess inventory and missed sales.
- Margin and Revenue Growth: Gross margins rose significantly (from 52.8% to 60%). AI-driven operational planning allowed Levi’s to optimize pricing, reduce markdowns, and prioritize high-margin items, directly contributing to healthy bottom-line growth.
- DTC (Direct-to-Consumer) Channel Growth: The company’s DTC revenue share increased dramatically, approaching ambitious targets (nearly 55% by 2027), supported by AI in personalization and digital experiences.
- Customer Experience & Loyalty (NPS): Better personalization, intelligent recommendations, and AI-powered virtual try-on tools drove a marked increase in average order values and conversion rates.
- Faster, Leaner Operations: Lead times and supply chain inefficiencies were reduced by AI-integration, enabling faster market responses and lower.
Levi Strauss retail experience initiatives:
AI in Retail- Virtual Stylist and Style Finder:
Levi’s introduced its “Style Finder” tool and an AI chatbot, designed on proprietary and TrueFit technology, that guides customers through a quiz to match their preferences with perfect fits and style options.
This significantly improved customer satisfaction and reduced return rates while enhancing cross-selling effectiveness.
BOOST Platform (Business Optimization of Shipping and Transport):
This patent-pending AI-driven solution optimizes e-commerce fulfillment by dynamically determining the best fulfillment options. BOOST helps expand available inventory pools, reduce split shipments, and streamline operations for cost-effective order processing.
AI in Retail-Generated Virtual Models:
Levi’s has leveraged generative AI to create diverse, realistic virtual models for its e-commerce platforms. This initiative enhances inclusivity and delivers a more personalized online apparel shopping experience by showing products on avatars closely matching customers’ body dimensions.
Read more about Predictive analysis with AI, click here

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