A family-owned kitchen and homeware company brings the power of AI to the dinner table

In 1973, the Karaca Group of Companies began production in a glass workshop in Istanbul under the name “Karaca Züccaciye.”

Today, it encompasses 11 brands and operates 305 stores with more than 2,000 points of sale across 43 countries. The family-owned business is now in its second generation and approaching $1 billion in annual revenue globally. As one of the largest homeware retailers in Türkiye, Karaca’s cutlery, tableware, cookware, home textiles, and appliances have been part of dinner tables for over 50 years.

With the shift to e-commerce across all retail sectors, Karaca had already started using AI to optimize its digital marketing worldwide. When Karaca CEO Fatih Karaca wanted to broaden the organization’s use of AI, he turned to its online shopping assistant, “AIDA,” with the goal of making e-commerce as personalized—and personable—as Karaca’s famous, white-glove in-store service.

“Broadening our AI was critical—and immediately needed,” he says. “By moving fast, we were able to uncover how almost every part of our operation could grow and change with this technology.”

Karaca and McKinsey’s collaboration began with extensive workshops across various domains within Karaca, including category management, marketing, operations, sales, legal, finance, and HR, to identify and prioritize potential domains. Working hand-in-hand with QuantumBlack, McKinsey’s AI arm, the goal was to find areas where AI could not only innovate but solve challenges by yielding the biggest improvements in savings, efficiency, value creation, and customer experience.

Aida screens

“We worked through almost 200 possible domains to get to the first ten or so where we could take action,” says Fatih. “The AIDA shopping assistant was the first project because we consider it a product with the potential to redefine the shopping experience for consumers, just like apps did back in the day. We were also ambitious and wanted to be among the global pioneers to employ consumer-facing AI at scale.”

Extensive testing helped ensure that guardrails were in place to safeguard the customer experience. “We spent a lot of time on these guardrails as well as on proving the benefits of the technology through A/B testing and fact-based analysis,” says board member Emre Karaca. “Once the teams saw the results, they became excited to begin and less wary of the technology.”

Karaca’s leadership team was instrumental in assuaging some of the hesitation about using AI and related tech. McKinsey senior partner Can Kendi recalls using a long-standing weekly breakfast meeting with Fatih to troubleshoot issues as well as brainstorm new ways to use AI to improve operations.

Elsewhere, teams from Karaca and Orphoz, McKinsey’s implementation arm, also created a new way to create textile designs for the company’s famous home goods offerings, like bedding, home decor, and tableware. The AIDA AI-driven chatbot was also developed to address frequently asked questions from employees, as well as customers, improving knowledge sharing and streamlining operations.

Other prioritized projects included AI-driven, cross-platform digital marketing optimization, which led to nearly double the return on investment (ROI) for each ad campaign, allowing Karaca’s marketers to realize a higher return on their advertising budget. “The impact is like having a thousand people analyzing your platform performance, 24/7,” says Berk Topcu, an Orphoz leader. “It’s simply impossible without AI.”

Once a bold bet—and the organization’s first project on its AI roadmap—Karaca’s new shopping assistant surpassed expectations early.

After launching to just 20 percent of users (two million people), AIDA had improved the conversion rate for shoppers online. “We’ve doubled the number of conversions versus search and reached five times the conversion rate compared to unaided sessions,” says Gökhan Arslan, Digital Channels Growth Director. And while AI technology costs were coming down naturally on their own, teams also were able to figure out how to lower the costs of each chatbot session by 97.5 percent prior to launch.

Today, shoppers say the assistant’s ability to understand what they need and guide them to products they’ll enjoy surpasses their expectations.

Beyond growing customer satisfaction, the project has helped Karaca build new capabilities and become a data-driven organization. As one example, AI project teams now have a set of protocols in place to improve data quality prior to each project launch.

“Data quality is the core of everything. Because while AI is smart, if data is not correct, available, or reachable, AI responses will be half complete,” says Emre.

For Fatih, the biggest value captured from AI may still be yet to come: “We’re just getting a glimpse of the opportunity AI brings us as a company and how powerful it can be when reaching out to our customers with the personalized service they’ve come to expect,” he says. “Everything we learn, and everything we continue to learn, makes us more eager to see where we can go with this technology.”