- UBS study finds 96% of major fashion companies using AI.
- Market perception lags behind reality, missing a potential “bull case.”
- Improved efficiency reduces reliance on discounts and boosts margins.
Artificial intelligence is rapidly transforming the fashion industry, with adoption far outpacing investor expectations, Swiss bank UBS reported in a new benchmarking study. The research suggests the market is underestimating how aggressively clothing and luxury brands are integrating AI into operations, potentially creating an overlooked upside for retail stocks.
UBS analyzed 45 major apparel and luxury companies and found that 96% are actively using AI technologies, a dramatic shift from perceptions in 2023 when many investors viewed the “Softlines” sector as slow to embrace new tech.
The bank highlighted that many brands have become cautious about publicly disclosing their AI tools, likely to protect competitive advantages. Instead of signaling a lack of progress, this secrecy may reflect companies’ efforts to safeguard innovations in inventory management and hyper-personalized marketing, which are already contributing to improved results.
UBS said the industry’s focus on efficiency gains rather than AI hype is key. By predicting consumer demand more accurately, brands can reduce heavy discounting — a major drag on profitability — and improve full-price sell-through rates. Even modest improvements, analysts say, can materially boost margins and Return on Invested Capital (ROIC).
Beyond logistics, AI is also speeding up design cycles, enabling companies to respond to trends in real time and reduce waste. This accelerating “speed to market” advantage is becoming a differentiator among top players.
UBS concluded that while some investors remain focused on potential disruption from AI, the greater opportunity may lie in tangible value creation, positioning retail stocks for a possible rerating as adoption matures.
