Gap Inc. is shifting its focus towards technological advancements as it enters 2025, following a year of refining its core business operations. The company now aims to leverage artificial intelligence (AI) and other innovations to enhance efficiency and customer experience. With a portfolio that includes Old Navy, Gap, Banana Republic, and Athleta, the retailer is looking for ways to optimize its operations and maintain financial stability. Gap executives have outlined plans to integrate AI into multiple aspects of the business, positioning it as a key driver for future growth.
Previously, Gap’s efforts centered on stabilizing its financial performance and reinforcing its brand identity. The company saw varied success across its labels, with some achieving positive comparable sales. In prior earnings calls, Gap leadership emphasized the importance of brand revitalization and operational improvements. The latest shift towards AI represents a continuation of this broader effort, with greater attention now placed on digital transformation and efficiency.
How is Gap integrating AI into its strategy?
The company has established an Office of AI to drive innovation across different business functions. AI will be implemented to refine customer experiences, optimize product availability, and improve organizational efficiency. Gap Chief Technology Officer Sven Gerjets, who joined the company in 2023, is leading efforts to utilize AI for streamlining operations and enhancing decision-making processes.
What financial outlook does Gap project for 2025?
Gap expects its net sales to remain stable or increase slightly in the first quarter of 2025, while projecting a 1% to 2% year-over-year growth for the full year. The company continues to assess external economic factors, including tariffs and supply chain challenges. Chief Financial Officer Katrina O’Connell noted that less than 10% of Gap’s products are sourced from China, with minimal reliance on Canada and Mexico.
“We’ve been operating in a highly dynamic backdrop for the last few years, and we’re expecting the same for fiscal 2025,” O’Connell stated. “As a result, we’ve taken a balanced view with our guidance and remain focused on controlling the controllable.”
Gap’s leadership believes AI-driven strategies will contribute to revenue growth and operational efficiency. The company is exploring AI monetization opportunities related to consumer interaction, product development, and automation. CEO Richard Dickson highlighted the role of AI in enhancing productivity and driving value across all brand segments.
“In 2025, we will be developing AI monetization opportunities relative to the consumer experience, product to market, as well as organizational productivity,” Dickson said. “Now, 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 approach reflects a broader retail trend where companies emphasize digital transformation to remain competitive. Many retailers have been integrating AI to optimize operations, improve personalization, and enhance efficiency. The company’s AI investment follows similar efforts by industry peers who have sought to modernize their business models through technology.
While Gap’s focus on AI suggests a strategic shift, the success of these initiatives will depend on how effectively the company implements technology to address customer needs and operational challenges. AI-driven retail solutions have the potential to increase profitability, but they also require significant investment and strategic execution. As Gap navigates 2025, its ability to adapt to market conditions and effectively integrate AI will determine the impact of this shift on its long-term performance.
