From shelf to screen, artificial intelligence is rewriting the rules of retail. Over half (55%) of U.S. retail marketers are planning to increase AI investment to boost customer engagement, according to SAP Emarsys, amid strong efforts to keep consumers loyal in a challenging economic environment. From the retailer side, Walmart is one of the latest to join the fray, creating digital twins of its stores and introducing ‘super agents’ to assist shoppers.
And shoppers are turning full force to AI as well. Adobe Analytics showed that in just seven months, from July 2024 to February 2025, traffic from generative AI sources to retail sites grew by 1,200%.
The same technology retailers are racing to master is also reshaping how consumers connect, compare and choose. Shoppers’ expectations are evolving as fast as the tools themselves. The opportunity, and the challenge, for brands is to use AI not just as automation, but as amplification: a way to make every interaction smarter, faster and more human.
AI cannot simply be about optimizing operations because loyalty, the lifeline of retail, is not built on speed or convenience alone. It’s about emotional connection.
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State of Play for Retail Brands
Retailers and their manufacturers have faced unprecedented challenges in recent years. Tariff changes, inflation, cyberattacks and pressures on consumer spending have weakened brand loyalty. Not even household names can rest on their laurels.
The widespread adoption of AI is accelerating across retail, making differentiation critically important. Estée Lauder is one of several cosmetics manufacturers to have introduced an AI-based shade matcher in recent years, for example, so the tech alone can’t make them stand out. Paired with that, while some sectors, like financial services, are perceived as showing personality and engaging consumers more than in previous years, the retail sector faces the challenge of ensuring that slick technology doesn’t undermine that emotional connection and, ultimately, their brand’s value.
Now is a critical time for retailers and manufacturers to make sure AI interactions are moving their brands forward by leveraging their authority, equity and brand voice to drive connection and orchestrate growth, not just for operational efficiency and headline splashes.
Thinking Beyond Function
Agentic AI, product discovery tools and recommendation engines need to be positioned as meaningful extensions of the retail experience and not simply shiny new toys. It’s easy to get caught up in chasing what competitors are doing, but new features and technology should move the business forward by bringing genuine value to each shopper interaction.
Morgan Stanley has estimated a $6 billion cost saving opportunity for retail from agentic AI efficiencies. Companies already are rushing to make savings, but this cannot come at the expense of experience.
Take AI-powered chatbots: there was a sudden rush to deploy them as shopping assistants, and now they are everywhere. The intention is to smooth the customer journey, but too often the execution is off, missing the connection to brand voice, turning what should be a seamless shopping experience into challenges that obscure the brand’s attempts to connect. Customers being peppered with chat prompts before they’ve had a chance to browse or being met with generic, unhelpful answers aren’t going to see the value.
Success comes when there is a purpose beyond function. With our client Danone we worked to deepen customer relationships in this way. Over the past decade, the yogurt aisle has exploded from a handful of familiar options to a booming array of formats, flavors and health-focused alternatives. Variety was abundant but it made for a needlessly complex shopping experience. We partnered with grocery retailer Schnucks to design and trial a yogurt Finder with an interactive touchscreen kiosk in-aisle that educates shoppers on different types of yogurt, their health benefits and new options.
By directly playing into how people shop the yogurt category we tried to demonstrate empathy and make the tool a key differentiator and guide. Interactions with customers should reflect the tone and values of the brand for a tool’s impact to be greater than just its basic function.
Gaining Fans, Not Just Customers
Companies in retail should strive to make sure each interaction shoppers have with their brands or stores is driving loyalty. This is only possible when they take the next critical step of considering where this technology fits, defining its purpose in the shopper journey and ensuring they are using the data gathered to personalize the shopping experience and bridge digital and physical retail spaces.
Every use of an AI-powered search tool, in-app assistant or other consumer-facing technology provides implicit and explicit information about what shoppers are seeking. Knowing the language and approach they prefer is very powerful, not just to help them get to the products already available but also to point toward where there is opportunity for growth.
Shopping-related ChatGPT requests grew to almost 10% of total prompts last year, according to Bain, so the desire is there for brands and retailers that ask the right questions. Even if thousands of consumers start using your new technology, the value comes from facilitating the right conversation and ensuring the dialogue is focused on re-engagement rather than one-off transactions.
Walmart’s new assistant, Sparky, and Amazon’s Rufus provide examples of AI-powered interactions that could move a brand forward. As they get to know a customer they can offer personalized product recommendations, manage orders, connect with product benefits and suggest related products.
The intention is to streamline the shopping process and then anticipate what the customer might want to do next. By allowing customers to discover a relevant recommended recipe online, then use the same tool online or in-store to locate the products in it, AI can bridge the gap between content and cart. The value of the AI offering in this case is brand exposure and coherence, not just speed and scale.
Where to Begin with AI in Retail
There are many ways that AI can be leveraged in shopping experiences to bring brand voices to life, providing solutions to real user problems and driving loyalty. The best AI strategies start with clarity. Begin small, in the moments that matter most to your shoppers: discovery, decision and delight. It’s important for retailers and manufacturers to think about where their brands naturally meet their shoppers, then use AI to make that interaction smarter, faster, and more personal.
Whether through conversational tools, predictive insights or immersive store experiences, success comes from staying brand-led and shopper-focused. When AI is used to enhance brand expression and support human needs, it becomes more than a tool, it becomes a differentiator.
As VP, Growth and Digital Experience at FutureBrand, Greg Hedges sits at the crossroads of strategy, creativity and technology. He has spent the past 25 years shaping, designing and developing interactive experiences for clients of all shapes and sizes, including P&G, KraftHeinz, Stanley Black & Decker, American Express, Unilever, Pfizer, the Campbell Soup Company, Yahoo!, the National Retail Federation, PepsiCo, Starbucks, Walmart and Amazon. Before joining FutureBrand, Hedges spent 12 years working at RAIN, a digital agency specializing in conversational AI via voice experience design and development, where he started as a senior developer and in January 2022 left as Chief Experience Officer, leading RAINs Strategy and UX teams. Prior to RAIN, Hedges worked as a designer for Context Studio and for King Features, a division of the Hearst Corporation. He also spent several years teaching graphic design as part of the faculty at the S.I. Newhouse School of Public Communications at Syracuse University.
