How artificial intelligence is shaping retail

As one of the most promising, and fear-inducing, technologies of the day, artificial intelligence was a frequent topic of conversation across panels at Shoptalk’s spring conference in Las Vegas. Much like at the National Retail Federation’s Big Show in January, retailers considered the possibilities of the tech, how they go about implementing it and the ways retail remains very human.

Perhaps one of the most succinct statements about retail’s use of AI came from Mandeep Bhatia, senior vice president of global digital product and omnichannel innovation at Tapestry, who was in turn quoting someone else. 

“Humans won’t be replaced by AI. Humans with AI will replace humans without AI,” Bhatia said, a sentiment that was echoed across many panels as retailers considered how the tech could be useful and where human involvement is still very much needed.

Across the industry, retailers are turning to AI to help with customer experience initiatives and to boost loss prevention, while shoppers are turning to the technology to help them with purchases as well. Opinions are thus far mixed, but there’s no doubt that AI is one of the hottest testing grounds in retail right now.

Here’s a sampling of what companies had to say about the technology at Shoptalk Spring — and how they’re using it now.

Toys R Us

At Toys R Us, the brand jumped headfirst into AI with OpenAI’s Sora tool. According to Kim Miller, global chief marketing officer of toys at Toys R Us owner WHP Global, the retailer was the first to make a branded video through Sora. The retailer chose to make an homage to Charles Lazarus, who founded Toys R Us.

Although video storytelling with AI “has a long way to go,” Miller said it’s been improving quickly — and the effort at Toys R Us paid off.

“The video went viral,” Miller said. “A lot of people were asking, ‘Why did you do it?’ And I said, ‘The train has left the station and we wanted to be the first one on it. And we wanted to embrace it.’ We want to always be embracing new ways to tell stories and to reach people so that they are interested in not only the story you're telling, but how you're telling it as well.”

Meta

“All the small guys, startups, they're going — they're on the train first. They're experimenting. They're doing it. Where a lot of bigger brands go, ‘I'm going to wait. Maybe it won't fit my brand DNA. It's scary.’ But it is the ones who take the risk in this moment of gaining competitive advantage [that] will win,” Karin Tracy, group lead of retail and e-commerce at Meta, said. “I feel like so many have gotten over the hump of automation … the next hump is Gen AI for creative.” 

Meta already offers GenAI tools for ad creation, including background and text generation, according to Clara Shih, vice president of business AI at Meta. In one example, Shih said Living Proof saw a 13% higher click-through rate using its tools and 18% higher total purchase volume. But when it comes to creative, Tracy noted that human creativity is still a key part of that process.

“It's for the brands who figure out how to supplement the efforts of their creative team, of all the mundane stuff that's taking their time — think resizing images, writing different versions of copy, even making a still image move — these little moments that will have incremental points in performance and lead to this diversification that we know needs to happen,” Tracy said. “There's really low-risk ways you can get on the train. Doesn't have to be a full video yet, but there's ways that you can absolutely start using this and giving your creative teams time to be creative.”

Meta is also rolling out new ways for brands to use AI, including ads that customers can have a conversation with. Shih outlined a test case of this functionality with Kitsch, in which a shopper sees a video ad for a shampoo bar and has the ability to then ask the ad whether it will work for their hair type and order three different bars through the conversation. Voice agents like this also have the potential to break down silos between customer support and purchase-focused marketing chatbots, according to Shih.

“That voice agent might have a conversation with a consumer about pre-sales questions about the product — just asking if there's different allergens, how quickly can it be shipped to a certain location — but there also might be customer support questions,” Shih said. “In the past, we've deployed chatbots that were just for marketing or just for support. And so I think it's just time to make it a more cohesive customer experience and AI to lead the way and enable that going forward.”

The social media giant also just released omnichannel ads, which use AI models to connect shoppers with products that are in stores in addition to online. Shih proposed the example of a customer in Las Vegas shopping for makeup for the night, who needs to buy a product in person.

“Our local ads can now show which store nearby, across the street in the Las Vegas mall, has this particular product in stock and target us specifically because of a variety of factors that AI picks up,” Shih said. 

Overall, Shih likened the state of AI now to the early days of the internet.

“Roll up your sleeves and start trying. I think that AI is one of those technologies that you really learn best by doing,” Shih said. “Those who are able to lean in, just like those who were able to embrace e-commerce early 20 years ago, it's a moment to create sustained competitive advantage.”

Foot Locker

“I think it can be really tempting with retail tech trends to think of it as an ‘or,’ right? It’s framed as stores or digital, human-centric experiences or AI-powered experiences,” Kim Waldmann, global chief customer officer for Foot Locker, said. “It's easy to get to the ‘or,’ but really it's a false dichotomy. I think what we really believe at Foot Locker is tech enables more human powered-experiences … tech and AI can remove some of the more mundane, transactional, manual work from our store employees and free them up to do what they do best, which is be creative, storytell.”

As one example, Waldmann highlighted that the retailer is using AI to sift through customer experience data and help customer service employees resolve issues faster. That has in turn improved net promoter scores. The retailer also uses AI to create product details that are relevant for different markets — for example, translated into a different language or using different measurements — from the same product photo.

Improving search results and product recommendations on the retailer’s website is another “key focus,” according to Waldmann. But many of the applications are on the back-end. Foot Locker has invested in business reporting and intelligence functionalities that use AI, for example.

“Right now, you can make a vocal command or vocal request of the system and get, for instance, what were my gross margins and sales in Spain yesterday?” Frank Bracken, who was named president of Foot Locker last week, said. “And a report is generated automatically.”

An AI-driven workforce management system the retailer recently implemented takes into account data like sales forecasts and promotional calendars to help land the right number of employees in stores.

“The more productive we can be as an organization, the more we can flow into consumer-facing investments, whether it's brand building, whether it's storytelling or more refreshes and reimagined Foot Lockers,” Bracken said. “So it becomes a very perpetuating cycle in a great way.”

Google

“We can't say it enough that AI is a significant opportunity, not just to run better ads, but to actually run a better business,” Sean Scott, vice president and general manager of consumer shopping at Google, said. “And I really do think the brands that are the most willing to adapt and the most quickest to adapt will be the ones that get ahead.” 

For Google (and sister company YouTube), AI is behind features like Google Lens (which allows shoppers to search for items based on images), AR product viewing and local shopping. Much like Meta’s omnichannel ads, Google’s local shopping lets customers locate an item at a store nearby versus just online. As an example, Scott noted he’d used Google to locate a part he needed to fix a leaky faucet and picked it up that day at a nearby store. But it only works if brands participate.

“What that means is you have to upload not just your online inventory or not just one store’s inventory, but all of your stores’ inventory,” Scott said. “Because, again, shoppers are everywhere and if you're going to reach them wherever they're at, you need to make sure that that inventory is available for them so dads like me can fix leaky faucets.”

When it comes to features like Google Lens, Scott said the company sees about 20 billion visual searches per month and 25% of them have commercial intent. The executive also noted that AI is helping make very specific searches on Google yield more helpful results. A search for “men’s jeans for a Shoptalk keynote” brought up advice for dark washes and straight cuts, according to Scott, whereas a search for “skis for the Pacific Northwest” recommended wider skis to cope with the heavier snow in the region.

“What's really, I think, unique and amazing about all this is that we're not a retailer. We don't have any inventory. We don't ship anything,” Scott said. “And yet, over a billion times a day, people are shopping across Google.”

Tapestry

Summarizing associate feedback and generating product copy are two ways Tapestry is already using AI — and the luxury retailer is also considering how it can be used to generate code and experiences faster. But even as more uses become obvious, it’s important to start simple.

“Let's be real, right? There is fear in peoples’ mind, there is hesitation in peoples’ mind,” Bhatia said. “And how is it going to impact my life? How is it going to impact my job? And those things are very real and you need to acknowledge that — you need to have empathy with that.”

Bhatia stressed the need to train employees and bring them along on the journey across all levels of the organization.

“Have a lot of empathy with people, try different things and then create communities where it's safe to ask questions, where it's safe to learn, and that's how this change and training will happen,” Bhatia said.

At the National Retail Federation’s Big Show at the Javits Center this year, the topic of AI was inescapable.

Nvidia’s Azita Martin, who is the company’s vice president and general manager for retail and CPG, helped set the tone as she discussed “game-changing times for the retail industry” with Walmart U.S. chief John Furner. She also spoke with Lowe’s Chief Digital and Information Officer Seemantini Godbole and Randy Lack of Dell Technologies about how the home improvement retailer “leverages AI to become an agile digital retailer.”

“AI is real, and I encourage all of you to get started,” Martin told the NRF audience, after Furner noted that AI can be intimidating. “I would first of all really recommend that the AI initiatives be top-driven. In other words, you need executive sponsorship. You need to have the top executives in your company believing. The second thing I would look at is, what are some of your biggest business challenges?”

Because of the massive number of AI-related sessions, speakers and vendors at the 2025 Big Show, there is no way to capture all that was said on this vast topic, but here are four themes that emerged.

AI could revolutionize supply chains

Retail supply chain executives were late to the party, but have recently embraced the potential of AI to streamline and improve several processes, from forecasting and procurement to fulfillment.

The pandemic roiled supply chains, which led to inventory woes that some retailers are still grappling with. That has revealed the need for updated technologies. Nvidia itself recently unveiled Mega, a new AI product that employs a digital twin to develop, test and optimize systems before they’re actually deployed at facilities, while Lowe’s has employed digital twins at 1,700 of its stores that provide daily operational and inventory updates.

“Supply chain, more than anywhere in retail in my opinion, is going to benefit the most from AI,” Martin told Furner. 

AI pumps up personalization, but privacy remains a concern

E-commerce players have long boasted that they have access to customer data that stores can’t collect, and AI is set to deploy that in fresh ways, several speakers noted during the conference.

This means a new era of digital shopping assistants and other methods of communication. Tapestry, which runs Coach, Kate Spade and Stuart Weitzman, is piloting AI-generated imagery that the company’s Vice President of Omni, Trang To, said “has the potential to unlock hyper-personalization at scale.”

“Cross-domain information feeding our AI models, to be able to deliver more insightful outputs on what the customer wants to see next, is critical,” she said. “And the second piece, historically, that has been the biggest hurdle for us in personalization is the speed at which we could create creative content to address all of these individuals versus segments. And that's something that I'm really excited about.”

But privacy remains a concern for many consumers, making it a concern for retailers as well.

“A decade ago [there was] a tug of war between privacy and personalization, and the tug of war is still going on,” Macy’s, Inc. CEO Tony Spring said during another session. “The reality is, we own the responsibility with the relationship ... We have to be better caretakers of information. We have to be smarter with the information we already have, and earn your trust over time with what we do with it.”

The use-case isn’t always clear

It was difficult to find a retailer at the Big Show that wasn’t at least piloting some AI-driven technology, in some capacity, for some area of its business. But many, if not the majority, seem to be in test mode.

“It's always going to be a learning experience, right?” Karen Etzkorn, chief information officer at Qurate Retail Group, said. “I think we find with Gen AI, every use-case we try, some of them have gotten significant value. Others we put to the side.”

At H&M, 2024 was a year of exploring AI, in the spirit of what Chief Digital Information Officer Ellen Svanström called an entreprenuerial mindset that is part of company culture.

“The interest and the exploration from our colleagues has been big in this area,” Svanström said. “However, we've yet to see a very real ... use-case that we can truly see specific and good value from, but we see enormous potential. In parallel, we have invested in and focused on and been very disciplined to build out our new data platform to ensure that we can truly scale in a secure way going forward. So, going forward, being open to what the real use-cases will be, to deliver value, we are ready to really focus and nail down on that. So I think in 2025, focus will be key for us.”

At least for now, there is no retail without humans

AI may have dominated the Big Show, but the 40,000 humans who attended it represent the billions of customers and employees who dominate the world of retail.

At American Eagle, Chief Marketing Officer Craig Brommers said the apparel retailer is approaching the use of AI with caution, in an effort to avoid the kind of high-profile AI-fueled blunders made by a few brands last year and preserve the authenticity and diversity its customers value.

In fact, AI is emerging as a tool to assist humans, rather than take over from them.

“Even in an environment where we know technology is going to play a bigger and bigger role in retail, listening to consumers and human interaction still matters,” Target CEO Brian Cornell told an NRF audience. “I think it's that balance between technology and that human interaction in retail that's going to pave the way for the future. So I think you’d better spend some time making sure you build trust, have those honest conversations, explain the ‘why.’ In a changing environment, we know it's going to be the combination, it's not an either-or. It's going to be that combination of technology that's going to fuel growth, and human interaction in retail, I believe, is going to play a role for years to come.”

Sponsored content

By Avanade

Almost overnight, generative AI has become retail’s most powerful shopping influencer. It’s changing how consumers discover products, ask for advice, make purchases and receive after-sales services—both online and in-store. Yet, new Avanade Trendlines research shows 79% of retailers say they risk falling behind by not moving fast enough on AI adoption.

Real-world impact

As a proven driver of revenue and growth, conversational commerce is now a top priority in retail around the world. For example:

• Instacart, a major grocery delivery platform in North America, lets consumers ask for recipe ideas via AI, which then automates ingredient selection and ordering—boosting basket size and saving time.
• Bricorama, a French DIY retailer, uses a generative AI assistant called "pAInt" to offer trending paint styles, suggest in-stock products and guide customers through painting projects.
• Currys, a UK electronics retailer, enhances customer service with AI—supporting both purchases and after-sales through intelligent chatbots that assist with setup, usage and warranties.

Driving growth and profitability

Retailers using generative AI see increased average order values through better cross-sell and upsell and fewer returns due to improved product recommendations. AI shifts retailers’ focus from resolving complaints to driving proactive customer engagement.

AI agents in action

Microsoft and Avanade offer a range of AI retail agents and Copilots, including a:

• Personalized Shopping Agent: An AI-powered chatbot that helps shoppers discover products—online or in-store with optional voice control using an Avanade plug-in. It understands context, refines product recommendations and links with back-end systems to show available stock and upsell options like extended warranties.
• Store Operations Agent: A single interface for store associates to access store policies, check inventory, create incidents and place orders—without jumping between apps.
• Clienteling Copilot: Gives staff real-time access to customer profiles and purchasing history and drives a more personalized service to build loyalty. It was created by Avanade with integrations into retailers’ CRM systems.

Practical use cases

A shopper might say to an online agent, "We live in a small apartment and need a lightweight vacuum." The AI agent asks clarifying questions, performs semantic search, checks inventory and recommends the best match—streamlining the experience.

As customers often come well-prepared into a retailer’s stores, it's crucial for staff to be equally or more knowledgeable about the entire product range with access to the agents.

Tackling data challenges

Despite the benefits, 70% of retail leaders say poor data quality and governance hinder AI adoption, according to Avanade Trendlines research. Disparate, outdated, or duplicated data make it hard for retailers to gain a unified view of customers.

Avanade helps retailers overcome this by integrating AI agents into business processes and building unified data platforms, leveraging Microsoft Fabric and 1,000+ connectors via Microsoft Copilot Studio. These platforms enable seamless data flow across the organization—fueling real-time personalization and context-aware commerce.

A multi-agent approach

Instead of one all-purpose agent, retailers benefit most from a network of purpose-specific agents. We’ve talked about shopping and operations here, but Microsoft and Avanade also have a wide range of sales, marketing and HR agents. This modular approach allows rapid innovation and continuous improvement, ensuring employees are always supported with the best tools.

Generative AI also accelerates ideation and execution across departments. Marketing teams can create campaigns faster, product teams can refine metadata and design teams can prototype new offerings with ease.

Increasingly, every employee will have a Copilot working as their personal assistant. Grounded in work content like email, meetings and documents, Copilot is the new User Interface (UI) for AI. At the same time, every business process will have an AI-powered agent leveraging specialist functional knowledge to trigger actions. It works on behalf of employees, teams and functions and can be connected to Copilot or autonomous.

Conclusion

AI powers mission-based shopping by delivering personalized, timely and effective experiences. Retailers that meet customers in their moment of need with AI-driven solutions gain loyalty and increase average transaction and lifetime value.

As the saying goes, “retail is detail.” With AI agents, retailers can master those details at scale and speed—delighting customers and driving profitable growth.

Retailers have AI on their minds. Leaders hope the technology can help with operations, from sourcing to customer service, and some see AI as a game-changer. 

At the National Retail Federation’s event in January around 40,000 attendees discussed AI’s potential impact on supply chains, personalization and privacy. 

However, retailers are running into implementation hurdles as AI adoption ramps up, according to a February Everseen report. The findings come from a survey conducted by Censuswide, which polled more than 1,000 consumers and 200 executives at large retailers in the U.S.

Around three in five retail companies have turned to AI to boost loss prevention, with another 30% planning to do so in the next 12 months. The top benefits retailers are eyeing include better customer experience and support, improved store layout and better inventory management, Everseen found. 

And implementation challenges persist. Retailers most often cited the time and resources needed for training and a dearth of customer trust as key hurdles, followed by difficulty integrating with existing systems.

While best practices are still being ironed out, strategies are taking shape. 

Gap plans to capitalize on investments it made in AI last year by exploring ways for the technology to boost revenue, executives said during its Q4 2024 earnings call earlier this month. As the company pursued a digital-first mindset, it set up a unit last year dedicated to driving AI innovation across its strategic priorities. 

J.C. Penney, David’s Bridal and Bath & Body Works are executing their own AI strategies, each with a different core focus, such as supply chain optimization or retail media improvements. 

The largest retailers, such as Walmart and Target, are also building out robust plans.

As retail companies move forward with AI plans, shifts in customer sentiment are top of mind. Balancing innovation with customer comfort will be key. Nearly three-quarters of shoppers surveyed by Everseen wanted greater transparency of AI use in grocery and retail stores. Retailers are addressing the concern so far by adding signage disclosing the use of AI at entrances, among other tactics.

It’s becoming the norm for consumers to use generative AI tools when deciding what to buy, a survey by Capgemini of 12,000 global shoppers found. 

Nearly three in five consumers have replaced traditional search engines with generative AI and over two-thirds of shoppers want the tech to aggregate search results from online search engines, social media platforms and retailers’ websites. Roughly two-thirds of millennials and Gen Z, closely followed by Gen X, have replaced traditional search engines with generative AI tools such as ChatGPT for product recommendations, the survey found. Just 44% of baby boomers use generative AI when shopping.

Consumers are also growing reliant on social media as a primary source across the entire shopping experience, from discovering products to making purchase decisions and engaging with retailers. 

Nearly one-third of shoppers used social media to buy products and identify new brands last year, up from one-quarter in 2023. That number is even higher for Gen Z shoppers, where more than two-thirds have discovered a new product or brand on social media.

“Social commerce is the retailer’s route to Gen Z,” Capgemini found. Over half of Gen Z have bought products through a social media platform.

Beyond recommendations, consumers are also looking to social media for answers to questions about products, for reviews and to reach the retailers they purchase from. Over half of consumers occasionally use social media to search for product information and reviews. Two in five shoppers use social media for customer service. 

Other reports have shown that Gen Z looks to social media the most for making purchase decisions. Over half of Gen Z have made an online purchase while browsing social media, a survey by Walmart and Morning Consult found. 

Research from the ICSC found the vast majority, 85%, of Gen Z says social media impacts their purchase decisions, particularly TikTok and Instagram as the top platforms.

Generative AI has made similar strides, but across all generations of consumers. Nearly three in five respondents to an Adobe survey last year said generative AI has already improved their online shopping experience. Two-thirds of survey respondents want brands to analyze previous purchases and customer information to personalize the shopping experience.

Walmart in March introduced Wally, a generative AI assistant for its merchants.

Wally is intended to help merchants better understand product performance, including why some products are under or overperforming or which categories had the largest gross merchandise value increases. 

“By automating time-consuming tasks and providing actionable insights, Wally enables merchants to focus on strategic, creative and innovative activities that enhance customer experiences and meet evolving customer expectations,” the retailer said in a statement.

The tool can conduct data entry and analysis, diagnose product performance, answer operational questions and complete advanced calculations. The AI model used in Wally has an advanced algorithm enabling it to process larger volumes of product data. The company said it plans to continuously improve the tool with feedback from Walmart merchants.

Walmart was an early adopter of generative AI. The retailer has incorporated generative AI for its associates to help them answer customer product questions or to help a shopper find a specific item. It also deployed the tech to improve its search, summarize reviews, prioritize product features for customers, and as part of a spatial design tool. 

Behind consumer-facing use cases, Walmart also incorporated generative AI for coding assistance. The retailer reports the tech helped save about 4 million developer hours, streamlining deployments and delivering code faster with fewer bugs.

Many other retailers are leaning on generative AI as part of company operations. In a recent earnings call, Target said it used the tool with social media, tapping generative AI to catch online trends and boost relevant products faster on its storefront, curating its digital experience.

Luxury shoppers are increasingly embracing artificial intelligence.

Two-thirds of luxury consumers say they use AI features when they shop for fashion online, according to a survey of 1,688 people released by Saks Global. The number of shoppers using AI is up 2 percentage points compared to the same time in 2024.

The most common use of AI for online shopping was providing body measurements for size recommendations or product visualization. However, respondents said it is more unlikely they will upload personal pictures for virtual try-ons. The vast majority of luxury shoppers say they are likely to engage with personalization activities, according to the survey. The top actions were creating an account, generating a wishlist and answering questions about their shopping preferences.

Luxury shoppers have high expectations for the service they receive compared to non-luxury shoppers, particularly when it comes to convenience, according to Matt Moorut, senior director analyst at Gartner. However, not all forms of personalization are equal.

“Personalization needs to be in support of better customer experiences,” Moorut told CX Dive in email commentary. “It needs to help customers achieve their objectives, rather than just showing that you know customers. Focusing on the benefit is a way of avoiding ‘creepy’ personalization, which can deter customers from engaging with brands.”

Luxury consumers’ top personalization demand is content and recommendations that offer exclusive access to limited products, rewards and offers, according to the Saks study. They also seek reminders of these offers.

AI can be a boon for retailers aiming to win personalization-hungry luxury customers, and the right precautions can maximize that opportunity.

Luxury shoppers usually adopt new technologies faster than the general population, and AI can offer retailers a leg up with this demographic, according to Moorut. However, consumers in general have mixed feelings about generative AI and luxury shoppers are no exception.

“Data privacy is increasingly a public interest,” Moorut said. “If you consider that consumers are often hesitant to provide a cell phone number due to privacy concerns, you can imagine how they would perceive the risk of providing something like a full body image.”

High-profile data breaches are weighing on consumer trust as well, according to Julie Geller, principal research director at Info-Tech Research Group. This could contribute to them refraining from sharing images while engaging with less personal options.

“Luxury shoppers, in particular, are wary of potential data leaks and the misuse of personal images, fearing they could be exploited for scams or unauthorized marketing,” Geller told sister publication CX Dive in emailed commentary. “Additionally, many value their anonymity and prefer to keep their shopping habits private, further discouraging them from sharing personal photos.”

AI can still enhance the customer experience without needing customers to share individualized personal information.

Luxury retailers can use AI with their own customer data to help them predict consumer preferences and deliver the right personalization to meet sophisticated expectations, according to Geller. They can also forecast trends and demands with greater accuracy to ensure they have what customers want available for purchase.

Artificial intelligence is increasingly becoming a popular tool for retailers.

More than half of retail and consumer packaged goods executives will invest in AI tools for marketing (56%) and financial forecasting (52%), according to a survey sponsored by Carl Marks Advisors. More than a third (34.4%) said they plan to invest in AI for customer service and user experience (39.2%) and supply chain management (34.4%). 

To enhance customer experience, respondents said they planned to invest in buy now, pay later programs (37.2%), modernized storefronts (36.4%), same-day delivery services (35.6%), hiring more employees (34.8%), automated services (29.6%) and self-checkout (27.2%), according to the survey. The executives surveyed represent retailers and CPG firms generating between $25 million and $300 million in revenue. 

While half of the survey respondents expected their sales to remain the same in 2024 compared to 2023, nearly 40% anticipate their sales to grow this year, per the survey results.

Carl Marks Advisors’ survey signals retailers’ continued investment in AI as the industry tries to establish best practices. In November, the National Retail Federation introduced its four principles for AI usage in retail, including customer engagement and trust, governance and risk management, workforce applications and business partner accountability. 

As the NRF aims to steer responsible AI use among retailers, major online retailers are already deploying the technology. In September 2023, eBay unveiled its “magical listing” tool, which summarizes product details using AI. That same month, Amazon launched a tool that assists merchants with creating product descriptions with AI. 

Meanwhile, major brick-and-mortar retailers have delved deeper into AI. Walmart debuted My Assistant, a generative AI-powered tool for non-store staffers in the U.S. The retail giant also announced its pilot for an AI and augmented reality-driven tool that aids customers in designing their rooms. The retailer is also deploying generative AI to improve its search capabilities, assist shoppers with complex purchases, help customers prioritize product features and show review summaries. 

As retailers search for ways to impress customer experience, research suggests that retailers’ focus on same-day delivery may be misguided. A report from Forrester found that three-quarters of U.S. online shoppers cited free shipping as the most critical factor in choosing where to shop online. By contrast, almost half of survey respondents said that same-day delivery has no influence on which retailer they select. 

“With inflation abating and interest rates leveling off, 2024 presents an exciting opportunity for retailers with the courage to embrace out-of-the-box thinking and innovation,” Howard Meitiner, managing director at Carl Marks Advisors, said in a statement. “Retailers who are prepared to re-evaluate their business model and take the necessary steps to invest in integrated omnichannel experiences should be optimistic about the coming year. Following record lows in unemployment and a strong holiday season for retailers now is not the time to be pessimistic. Companies willing to risk trying something different — whether a new strategic partnership or sourcing on-shore — will be rewarded in 2024.”

Many consumers are unaware that generative AI is already making its way into e-commerce, and leaders have an opportunity to build trust as they integrate the technology into customers’ shopping journeys.

The top reason shoppers cite for not using generative AI tools is happiness with their current shopping methods, according to a Bain & Co. survey of more than 700 consumers. Generative AI can still enhance experiences for these consumers by blending with traditional shopping journeys, such as through review summaries on product detail pages, according to Bain.

One of the most valuable generative AI use cases is facilitating purchase decisions through personalization. The survey found that consumers are most willing to share information about their personal interests, like hobbies and favorite products.

While generative AI is a hot topic for customer experience leaders, seven in 10 consumers said they were not aware of having used generative AI even when they recently shopped with retailers that were likely to use it, according to Bain’s findings.

Gartner research found that a majority of consumers are somewhat or very familiar with generative AI as a concept, according to Kassi Socha, vice president and analyst at Gartner. However, they may become skeptical of the technology as it evolves from a buzzword to a part of everyday life.

As a result, retailers need to focus on use cases that will offer consumers a clear value-add, according to Socha. Bain’s survey highlighted the potential of personalization, while Gartner research found that two in five consumers would use the technology to help them search for better deals.

“It is more important to find use cases where gen AI can be piloted in a way that makes shopping more convenient or enjoyable rather than simply spinning up a gen AI experience to signal embracing the technology for the sake of participating in the cultural zeitgeist,” Socha said in an email to sister publication CX Dive.

Transparency is essential to earning consumer trust. Companies that are transparent about their use of generative AI features can ease customers’ concerns as the technology becomes more integrated with their website.

This is in line with Gartner’s research on the subject. Three-quarters of consumers expect disclosure when generative AI is part of an interaction, according to Socha.

Retailers have jumped headfirst into providing AI tools to solve customer pain points.

As more retailers experiment with AI, 58% of respondents to an Adobe survey said that generative artificial intelligence has already improved their online shopping experience. Two-thirds of respondents said they want brands to analyze their previous purchases and other customer information to tailor the shopping experience to their needs, according to the survey, which included 3,000 U.S. consumers.

More than half of shoppers said they are likely to use generative AI tools to help with clothing purchases. Seventy-one percent of respondents said they think using generative AI to try on products virtually before buying them could assure them in their online shopping decisions, Adobe found. Among the top generative AI use cases consumers look forward to are: automating product filters based on customer needs (40%), creating customized items (37%), summarizing product reviews (37%) and customer service chatbots (36%).

In recent years, major retailers, including Etsy, Walmart and Sam’s Club, have used AI to manage everything from checking receipts and providing gift recommendations to enhancing search capabilities and summarizing product reviews. 

Alongside consumer interest in generative AI, Adobe found that most marketers are already using it. Of 400 U.S. marketer respondents to Adobe’s survey, two-thirds said they are using generative AI as part of their marketing strategy, though almost half (46%) are still in the experimentation stage. Among the tasks that marketers expect to use generative AI for are deploying personalized customer experiences at scale (59%), offering faster customer support (51%), streamlining internal workflows (50%) and optimizing marketing budgets (43%).

Adobe’s report builds on previous research suggesting that retailers will use artificial intelligence for more tasks in the near future. A Carl Marks Advisors survey found that consumer packaged goods executives are planning to use artificial intelligence for marketing (56%), financial forecasting (52%) and customer service (34.4%), among other functions. Meanwhile, over a fourth of retail executives surveyed by Coleman Parkes Research and Algolia said they anticipate artificial intelligence becoming a more significant part of search experiences this year.

As retailers integrate artificial intelligence tools into their businesses, the National Retail Federation has introduced parameters for responsibly doing so. The NRF introduced principles for using AI in the industry, spanning customer engagement and trust, governance and risk management, business partner accountability and workforce applications.