Gap leans on AI to enhance productivity, revenue & customer experience

Clothing company Gap Inc. is exploring ways it can use artificial intelligence (AI) to boost organizational productivity, revenue and customer experience, executives said during the retailer’s Q4 2024 earnings call.

Gap’s AI-driven focus comes after the firm laid the groundwork for its AI strategy last year, setting up a unit dedicated to driving AI innovation across the retailer’s strategic priorities. Gap CEO and president, Richard Dickson, called the efforts part of Gap’s goal to create a “digital-first organization and mindset.”

Gap is the largest specialty apparel company in the US with a portfolio of brands including Old Navy, Banana Republic and Athleta.

Targeting AI opportunities

In 2025, Gap will be developing AI monetization opportunities relative to the consumer experience, product to market, as well as organizational productivity, Dickson said during the recent earnings call. “Having organized the various ways we can use AI to enable value creation, we’re prepared to mobilize against this framework with intention.”

Gap’s AI efforts are being led by Sven Gerjets, chief technology officer (CTO). Gerjets joined the clothing company last year after serving as EVP and CTO at toy company Mattel for seven years. “We have just started the journey with data science, and I am confident that Sven’s expertise and leadership will put us on the right path to success,” Dickson said last June.

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Gap eyes ongoing transformation

Gap ended 2024 delivering a successful quarter, exceeding financial expectations and gaining market share, according to Dickson. For the full year 2024, Gap achieved one of the highest gross margins in the last 20 years and meaningfully increased operating margin versus the prior year, he added.

“These strong results are underpinned by the momentum we’re seeing in our operational execution, our culture and the reinvigoration of our brands as they climb in the cultural conversation. Looking ahead, 2025 represents an exciting step in our ongoing transformation as we continue to drive towards becoming a high performing house of iconic American brands that delivers long-term value for our stakeholders,” Dickson stated.

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AI’s increasing role in OPEX and business transformation

The impact of AI on operational excellence (OPEX) and business transformation is a standout theme of the PEX Report 2025, PEX Network’s flagship research report. In a survey of almost 200 professionals, AI was cited as the biggest investment area this year with almost half of businesses looking to spend on AI solutions in the near future.

Meanwhile, 58 percent of organizations have discussed potential AI projects to drive OPEX and transformation objectives with 14 percent in the process of developing their first AI pilot project. The same number (14 percent) have piloted at least one project, with 6 percent having operationalized one AI project, dropping to 5 percent that have operationalized multiple successful AI projects

The areas where AI is being leveraged the most are in operations (35 percent), customer service and call centers (29 percent) and data processing and management (24 percent).

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