Retailer Zalando launches AI shopping agent as margins squeezed

PARIS, Nov 3 (Reuters) - European online fashion retailer Zalando on Tuesday unveiled its first AI shopping agent that will allow customers to buy products from other retailers through the Zalando app, as inventory-clearing discounts pressured quarterly margins.

The industry is grappling with weak consumer sentiment and the rise of so-called agentic commerce, in which AI agents can handle the entire purchasing process on behalf of shoppers, from comparing prices across retailers to completing payment.

Zalando reported a 0.9 percentage-point drop in its third-quarter gross profit margin to 38.7%, missing market expectations, according to analysts at Jefferies and JPMorgan.

"This decline was primarily driven by targeted investments in attractive offers for our customers in our retail business, especially in sneakers," Zalando finance chief Anna Dimitrova told analysts.

She said the margin pressure was temporary and forecast a broadly flat gross margin in 2026.

Shares in the company recovered from earlier losses after Dimitrova's comments, and were up 0.5% by around 0945 GMT.

"The stock could drift lower in the coming days given the lack of any incremental positives, in our view, and its current level, along with ongoing structural risk from agentic commerce development," JPMorgan said in a note to clients.

JOINING THE AI SHOPPING RACE

Zalando sells clothes, shoes and accessories from thousands of brands including Nike, Hugo Boss, and Coach.

As shoppers increasingly use AI to compare prices, check availability and get recommendations, retailers are racing to deploy AI tools and broaden the range of products offered on their platforms.

Zalando said it plans to launch AI-assisted checkout on its Zalando Extended platform in 2027. The service will allow customers to buy products from other online retailers without leaving the Zalando app, with AI agents helping to complete purchases. A pilot project with home furnishings retailer Westwing is under way.

Third-quarter revenue rose 5.1% year-on-year to €3.17 billion ($3.55 billion), above the €3.15 billion expected by analysts polled by LSEG. Gross merchandise value, which measures the total value of goods sold, rose 7.5% to €4.54 billion.     

($1 = 0.8937 euros)

(Reporting by Alessandro Parodi in Paris. Editing by Jan Harvey and Mark Potter)