Welcome to Tech Mode, a monthly guide to how AI and other technologies are reshaping the fashion industry.
One of the things that interests me about big, world-shaking language models is that some of their potentially impactful uses aren’t immediately obvious. Indeed, for fashion companies, writing copy and generating advertising images was a no-brainer. But Matt Kropf, CTO of BCG X, a consulting firm focused on designing and building AI solutions for clients, told me last year When I heard about how BCG used LLM to generate market research to give companies insight into what shoppers were thinking, I was blown away by the idea. I had never thought about companies implementing LLMs in that way.
A cottage industry has sprung up around synthetic consumer research, where AI is used to simulate shoppers and provide brands with information that can be applied to product development, marketing campaigns, discount strategies, and more. From conversations with people like Kropp and Kelly Pedersen, a PwC partner who heads the consulting firm’s global retail practice, it’s clear that many large companies are already using synthetic research, even if they aren’t talking about it publicly yet. Target is the only major retailer that I’ve noticed so far that discourages the use of synthetic audiences.
There are pros and cons to this idea, which you can read about in the following article. This article was published last weekbut I’m always intrigued by how cautious major fashion and retail companies are about disclosing how they use AI.
With that in mind, let’s take a closer look.
Why retailers are silent about AI
Wide range of applications: In a note to investors on Tuesday, UBS analyst Jay Saul actually addressed the question of how many of the companies he covers are leveraging AI. He based his analysis on disclosures such as press releases, company filings, earnings calls, investor conferences, and conversations with company management. The answer was that 43 out of 45 companies, or almost all companies, are using AI. (Birkenstock and Dillard’s were the only two companies he found without concrete examples of AI implementation.)
While that data might lead you to think there is always a lot of fuss about how companies are using technology, Saul pointed out that in discussions with public and private companies, there is a great deal of thought put into disclosing the use of AI. “We believe this is because companies are likely unwilling to give up a potential source of competitive advantage,” he wrote.
Leaders and followers: Saul also created an AI scorecard that ranks companies’ technology usage across six different dimensions: product development and innovation, supply chain and logistics, marketing, sales and customer experience, store operations, and finally organization and support functions. 14 out of 45 companies received a score of 100%. This includes companies that achieved perfect scores, including retailers from Revolve and Levi’s to Steve Madden and Victoria’s Secret, meaning they have some degree of AI implementation in every aspect.
While the use of AI was most prevalent in sales and customer experience across all companies surveyed, Saul noted that adoption of the technology varies widely, and in some cases even within companies. American Eagle uses AI to streamline back-office processes, but its Aerie brand also promises to never use AI-generated models, for example.
Let’s talk about it: The silence on AI in the fashion industry seems unusual at first, given how companies in other industries are talking about the topic. There are so many companies claiming to use AI when they aren’t that the term “AI washing” has even been coined. And there’s no shame in hiding it. Saul noted that AI will improve efficiency for retailers. “In fact, we believe that businesses want: [Ralph Lauren] and [Tapestry] Thanks in part to AI, we have recently been able to achieve very good results,” he writes.
However, this makes more sense when you consider the challenges of implementing AI. Companies may be reluctant to talk about pilot projects that may or may not work yet, tools that may impact a small number of employees but are not changing at the enterprise level, or changes to workflows that have great promise but have not yet yielded tangible benefits. The rise of publicly available LLMs also means that many employees at companies are using AI informally. These are all uses that companies may not want to say out loud.
Of course, Saul is right, there may be competitive advantages that a company does not want to share with its competitors.
“Addictive Design” trial underway
Attack line: This strategy is now in vogue, as regulators and plaintiffs in lawsuits have a new opportunity to pursue alleged harm against social media companies. Last week, the E.U. An investigation has begun against Shane. Regarding concerns including Shayne’s “addictive design.” The investigation will consider whether the platform’s features, such as awarding points for engagement, may have a negative impact on users’ well-being, and will also scrutinize the transparency of its recommendation system.
Addictive designs have become a prominent new vector of attack on social networks. The EU previously warned TikTok The app could violate the bloc’s Digital Services Act because it has features such as infinite scrolling that lure users into the app. Last week, a major trial began in the United States, stemming from a lawsuit accusing Instagram and YouTube of causing psychological harm with addictive designs. (Snap and TikTok have already settled with the plaintiffs.)
What’s going wrong: What these cases have in common is the argument that the platforms are building addictive experiences that can be harmful to users’ mental health, resulting in significant changes to those experiences. In its interim decision, the EU told TikTok it must change its design, including phasing out features such as infinite scrolling and implementing features such as “screen time breaks.” If TikTok cannot find a solution, it faces an order to redesign its app and a fine of up to 6% of its annual global revenue.
In the United States, the case against Instagram and YouTube is the first of more than a thousand similar lawsuits against the major social networks. A loss could open the door to huge claims for damages and force a rethink of the platform’s design. (By the way, Instagram beauty filters and their impact on teenage girls’ mental health) It was discussed in court (Just as the plaintiffs’ lawyers blamed Mark Zuckerberg, Meta’s founder and CEO, last week).
What it means for fashion: For most retailers, with the exception of Shein, these measures may not have a direct and dramatic impact. Shein is under intense scrutiny in the EU because it qualifies as a “very large online platform” under the Digital Services Act, meaning it has more than 45 million users in the EU. Few fashion retailers are as big as this one, and even fewer have apps with reward systems like Shein.
However, given that these platforms are some of the fashion industry’s popular marketing channels, any forced changes could still impact brands and retailers. Fashion companies are now benefiting from the way social media algorithms display fashion content to users most likely to engage with it, whether it’s campaign images or posts by influencers who sell products through affiliate links. While it’s unlikely that these benefits will suddenly disappear, they may be tempered or brands may have to adjust their strategies to a new environment that dissuades users from suddenly spending vast amounts of time scrolling.
Brands reconsider investing in virtual worlds
When you press pause: Brands have significantly pulled back on investments in virtual worlds like Roblox, Fortnite, and Zepeto in the last year, according to a new report from gaming data and strategy firm Geeiq. Investments soared from $3 million in 2020 to $441 million in 2024, before plummeting nearly 50 percent to a more modest $229 million in 2025.
The total number of new brand activations also fell last year, falling by 17%.
Game start: However, that doesn’t necessarily mean the brand has completely lost interest in the game. They have moved away from creating fully owned, standalone destinations within virtual worlds, such as Elf Beauty’s My Makeup Store on Roblox, but have started more integrations that are more akin to branded activations within existing games. One example is Valentino incorporating its fragrance into the Fortnite game Murder Mystery.
This type of integration increased by 14% even though the number of worlds owned by new brands decreased by 57%.
What do you mean: Geeiq’s take on this data was that it marked a tipping point for brands to move from experimentation to “more selective, goal-driven activation.” They are moving away from large one-off launches and instead toward more carefully planned activations that are quick to create, easy to measure, and have reproducible results.
This change sounds like what happens when a brand reaches a certain level of maturity in what was once a new channel. In the early 2020s, labels such as Balenciaga, Gucci, and Vans Enter the world of games To plant their flag. In 2026, joining Roblox or Fortnite is no longer new, but companies are definitely looking back to see if their investments paid off. Not everyone did it. The question is what happens next and how brands can make it worthwhile.
