There are still more questions than answers on artificial intelligence — What will AI change? Will it be smarter than us?  — but a group of Morgan Stanley analysts took a best guess at how the next machine revolution could impact retail costs.

The result? Big potential savings as more work becomes automated. 

Morgan Stanley’s AI framework suggested that fashion brands and retailers could see $6 billion in “total cost savings opportunity and potential,” at the midpoint of their estimates. That would translate into a 20 percent increase for earnings before interest and taxes in 2026 and “a large, sector-wide tailwind” for softline companies. 

As much as those potential savings will cause fashion’s accountants to sit up and take notice, the details from the report’s methodology show just how much the application of AI to business has people looking at work in new ways, slicing jobs up into a series of tasks and calculating dollars and cents. 

Anthropic’s Economic Index was used to estimate just how much of each task could be automated by agentic AI, finding for instance that 18 percent of a “retail salesperson” job could be automated. At an average salary of $37,000 a year, that works out to about $7,000 in cost savings per salesperson annually.

Most retail jobs have a similar or higher potential automation rate, including office supervisors and administrative support (44 percent), security guards (31 percent) and customer service representatives (25 percent). 

Extending the rationale across the business of Lululemon Athletica Inc., Morgan Stanley found potential savings of $14,300 per employee, totaling $560 million annually across the company’s workforce of 39,000. Assuming only half of that could be realized next year and that 5 percent went to implementation costs, the report sets Lululemon’s potential cost savings next year at $270 million, which would put EBIT 15 percent above current Wall Street forecasts.  

That, at least theoretically, is what agentic AI could do to cut costs on fashion. 

What brands should or will do is something else and is largely still to be determined. 

Some jobs have already been automated and eliminated — and surely more of that will happen — but fashion companies are still moving cautiously. And simply replacing humans with AI to replicate the current business model isn’t the goal fashion executives are shooting for. 

Jobs will also change as workers start to use AI more themselves and newly freed-up time is put to new purposes. 

Ralph Lauren Corp., which has leaned forward on technology for years, recently launched an AI-based “Ask Ralph” styling feature on its app, cozying up to the technology. 

“It’s going to become more and more valuable quickly,” said David Lauren, the chief branding and innovation officer, in an interview this month. “We know that everybody’s talking about artificial intelligence, but we wanted to explore it, use it, and learn. We’re confident that this is going to be a valuable tool, but we also recognize that what it is right now is the very beginning.”

When it comes to the potential of using AI to cut workforce costs, Morgan Stanley said Gap, Macy’s and Victoria’s Secret stand out as both having significant potential to boost profits and being particularly vocal on the technology. 

The report noted that department stores have the most to gain with more employees on the payrolls, “which creates a larger aggregate impact from automation,” and businesses that have “challenged fundamentals.” Brands, on the other hand, have leaner workforces. 

“Within softlines, AI appears to be most frequently used in inventory management, supply chain automation, demand planning/forecasting, and customer care/service,” Morgan Stanley said. “Our conversations also highlight customer care/service as a key area where AI has already been successfully implemented, particularly through the use of chatbots.”

The report also pointed to additional areas where AI could be added, including “marketing, inventory localization, pricing tools, and even products that incorporate AI — such as Warby Parker’s recently announced smart glasses partnership with Google.”

This is kind of the tip of the AI iceberg still. The study said most initiatives “remain in early stages” and that the technology could change how consumers shop. 

The Morgan Stanley study also focuses on the impact of agentic AI, which is “generative, able to make decisions, and automates systematic processes.” There are other potential impacts from embodied AI, which includes robotics and AI that interacts with physical systems.