Gap Inc. Acquires US-Israeli Retail AI Startup CB4

American apparel company Gap Inc. recently announced that it has acquired the New York and Tel Aviv-based startup Context-Based 4 Casting Ltd. (CB4), which uses AI and machine learning retail software to transform operations, increase sales, and improve the customer experience through predictive analytics and demand sensing.

CB4’s technology makes recommendations that support new sales and improves the likelihood of satisfied customers due to its ability to help resolve frequently occurring issues such as inventory discrepancies, pricing mismatches, and a lack of a price tag. Funded by investors including Sequoia Capital, CB4’s technology has been implemented by retailers including Levi’s, Urban Outfitters, Lidl, and Kum & Go.

In February, market research firm CB Insights named CB4 to its inaugural Retail Tech 100 ranking, which showcases the 100 most promising B2B retail tech companies in the world.

As part of the acquisition, CB4’s team will join Gap Inc. as full-time employees.

“CB4’s AI helps lift sales and enhance customer experiences. As we join Gap Inc., I’m excited to see how our team can drive even broader and deeper impact at the company’s global scale,” CB4 CEO Yoni Benshaul said.

Gap Inc’s Strategic Growth Office, a designated unit that seeks opportunities to advance growth and capabilities across its portfolio as the US’s largest apparel firm seeks to reduce its massive footprint and continues the process of shuttering hundreds of its stores until fiscal 2023, brokered the deal.

“We believe artificial intelligence and machine learning will shape the future of our industry. Gap Inc. has experience working with CB4’s world-class data scientists, so we understand the impact and the wide applications their science can have across sales, inventory and consumer insights, as well as its potential to unlock value and enhance the customer experience,” said Sally Gilligan, Chief Growth Transformation Officer, and head of the Strategic Growth Office at Gap Inc.

The acquisition of CB4 further highlights Gap Inc’s move toward a totally online shopping experience. In August, the company acquired Drapr, a 3D virtual fitting room that lets customers try on clothing online through the creation of avatars.

It is designed to help customers find the best clothing size and fit for their personal style and body type while helping retailers reduce unnecessary returns.

In addition to streamlining its online portfolio – at the same time as closing physical stores and reducing its commercial real estate rental costs by some $45 million by 2023 – Gap Inc. is also looking to push a higher profile for its growing Athleta brand, which is already worth more than $1 billion.

As part of the company’s Power Plan 2023, it has targeted increasing Athelta’s value to some $2 billion.