economy
'Silent killers': How AI start-ups are trying to solve one of the retail industry's biggest problems
The rapid evolution of generative AI has finally made these applications good enough to meaningfully impact retailers' bottom lines.
TL;DR
- Fashion retailers are using AI virtual try-on apps to reduce product returns, a major drag on profitability.
- Generative AI advancements have made virtual try-on technology effective enough to impact retailers' bottom lines.
- Product returns in the U.S. reached $849.9 billion in 2025, with online sales accounting for a significant portion.
- Gen Z shoppers, aged 18-30, are driving the increase in online returns.
- Start-ups like Catches are developing advanced virtual try-on platforms that incorporate fabric physics for more realistic simulations.
- Retailers are implementing strategies like return fees and virtual try-ons to protect profit margins.
- Companies like Zara, ASOS, and Shopify are integrating virtual try-on solutions, with tech giants like Amazon, Adobe, and Google also involved.
- While AI offers benefits for returns, retailers are also exploring its use in inventory management, customer targeting, and fraud prevention.