AI is reshaping customer loyalty, pressuring brands to deliver more personalized experiences, rethink what loyalty looks like beyond points and rewards, and prepare for a future where AI assistants increasingly influence purchase decisions.

At this week's CommerceNext Growth Show in New York City, executives from Ulta Beauty, Tapestry, Stitch Fix, and Novi shared how they're using AI to deepen customer relationships and why winning loyalty now means appealing to both consumers and the AI models guiding product discovery.

AI turns data into personalized experiences

Ulta Beauty is putting its vast customer data to work with AI-powered personalization.

With 95% of sales flowing through its loyalty program, spanning 47 million members and 1,500 stores, the retailer has an exceptionally rich view of customer behavior.

“We know a thing or two about not only what we're selling, but who we're selling into, and turning that into gold for the guests is really important to us,” said Josh Friedman, SVP of ecommerce and digital at Ulta Beauty.

Ulta uses its loyalty data and AI to personalize recommendations and promotions, while also helping store associates recognize and reward loyal customers in meaningful ways.

“AI is helping us develop better algorithms and generate better content,” said Friedman. “It's starting to help us with that decision process to help us develop our next best action.”

Tapestry is taking a similar approach with conversational AI, building a shopping assistant trained on conversations with hundreds of store associates, bringing the expertise of in-store staff to its digital channels.

“We created this bot where customers can put in more context, they can ask more about the product, they can compare products, like, and it becomes a natural conversation,” said Mandeep Bhatia, SVP of global digital product and omnichannel innovation at Tapestry.

The impact has been substantial: Shoppers who engage with the conversational AI are converting at four times the normal rate and adding products to their carts at five times the typical rate.

Loyalty beyond points and discounts

Meanwhile, Stitch Fix has built its entire business model around personalized styling that goes beyond traditional loyalty tactics. The online personal styling service uses both AI and human stylists to create individualized experiences.

"Everything that you do doesn't need to revolve around points or discounts, because the relationship is built on how you see human stylists work with you over a 10-year period," said Debbie Woloshin, chief marketing officer at Stitch Fix.

AI plays a growing role behind the scenes as well. Stitch Fix has roughly 40 AI use cases across marketing, from uncovering customer insights and optimizing content to using persona bots that simulate different client segments. The company's app has also become a key engagement channel, with about 60% of clients downloading and regularly using it.

Most recently, Stitch Fix relaunched its app and expanded its virtual try-on capabilities to include both customer-selected items and stylist recommendations. The goal is to make shopping feel less overwhelming by reducing decision fatigue while making it easier for customers to discover styles that fit their tastes.

Winning loyalty in the age of AI

Unlike traditional search, AI agents conduct their own research through what are known as "fan-out queries,” generating thousands of related searches to evaluate products before making recommendations.

"The surface area for your information is pretty broad," said Kimberly Shenk, co-founder and CEO of Novi. "Large language models literally just read language, and so language has to be very clear, and you cannot be inconsistent."

While loyalty remains a powerful driver of purchase decisions, marketers now face a new challenge: balancing AI-driven product discovery with the emotional connections consumers already have with trusted brands.

"AI recommends products as a unit or as a solution to a problem that a consumer is asking, not a brand,” said Shenk. “What we've seen brands focus on is making sure the right information about their products is available to the LLMs doing the research, so those models recognize when their products are relevant to recommend."

But it's no longer just consumers that brands need to win over. As AI increasingly influences product recommendations, brands also need to earn the trust of the models making those recommendations.

"Every iteration of a model, you have the opportunity to build loyalty with that model to choose your product in recommendations," she said.

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