Will the future of retail be led by humans or AI?

1. Hyper personalized engagement

AI-driven personalization can already transcend basic recommendations. Generative tools can dynamically tailor content and imagery in real time, at scale and for relatively low running costs, turning fragmented customer behavioral data into individual experiences across channels. In subsectors like apparel and personal care, this plays out through AI stylists, virtual try-ons, and chat-based agents that can provide intuitive, immersive interactions. In subsectors like grocery, it can mean pre-filled online shopping baskets, accurate product recommendations, auto-replenishment and more nuanced automated customer services.

2. Process automation and operational efficiency

AI is rapidly transforming store operations, category management, warehousing, logistics and procurement. Smart carts and cashier-less stores already leverage machine learning and computer vision to streamline checkout and elevate convenience. Agentic AI has the power to extend deep into category and promotion management by optimizing planograms, managing restocking, enabling dynamic pricing and adapting more responsive promotional design, continuously and without human intervention. Warehousing, procurement and logistics are becoming increasingly automated with robots managed by algorithms, to ensure accurate and demand responsive operations that speed up decision loops, reduce labor costs, improve inventory management, and sharpen category performance.

3. Autonomous, agentic shopping

If existing AI applications have the power to accelerate and optimize retail business activity, the potential of agentic systems is even more transformative. Consumer adoption of AI agents, with the power to perform complex shopping tasks, curate consumer choice and make purchases without explicit approval, will present a radical departure from traditional retail. This will draw up new competitive battlegrounds as retailers seek to develop their own agentic solutions alongside technology platforms and other players.

The potential for market disruption through agentic-led shopping should not be underestimated. If consumers delegate choice to AI, then retail interaction will bypass traditional engagement models. Product visibility and customer journeys, choice and purchase decisions will be shaped by algorithmic logic rather than emotional connections. This could progress further as agentic empowers household Internet of Things (IoT) ecosystems. The result could be a multi-agent household that co-ordinates individual agents to manage and negotiate for different aspects of the home. A refrigerator that re-orders milk, a car that books its own service – all transacting invisibly with retailers without their users even knowing about it. This may seem far away, or too costly to become mainstream, but many homes already have connected devices that can co-ordinate a range of household needs, as well as shop on behalf of their users.

The driving forces behind an AI-led retail future will be speed, scale and access. As AI radically brings down operational costs and cost to serve, it will create its own business case for the high investment required to deploy and maintain integrated AI systems. AI does not sleep, or draw a salary, enabling robotic automation to run 24/7 with minimal intervention. Increased access and adoption of AI tools for consumers and smaller retailers as well as the willingness of platform and infrastructure providers to create interoperable and open-source solutions will also drive scale.

An AI-led future for retail would be one of lean and largely automated enterprises servicing a customer base that neither chooses nor purchases the products that they need. Instead, they may rely on their own agents, or trust retail or platform agents to manage their buying needs. Competition will be driven by price and convenience, with both seeing productivity gains from algorithmic intervention. The cost burden of returns and customer service will plummet as agents will know the exact size and taste profile of their users and select accordingly.

Traditional marketing built on emotional storytelling will be reserved for niche and premium retail activities while consumer engagement will transfer to AI-led engagement. Where customers do physically shop for products, they will still be guided and served by AI, which will navigate their journeys through unmanned stores. The stickiness that human retail interactions bring will give way to completely frictionless commerce that is highly personalized to the needs of the user. 

The International Labour Organization estimates that retail accounts for over 420 million jobs globally, while the National Retail Federation estimates that retail is the largest private sector employer in the US, accounting for 26% of employment. These estimates may be conservative given the penetration of the informal retail sector in the emerging world, notably India, which prides itself on being “a nation of shopkeepers.”¹ If retail becomes entirely AI-led, the impact on employment could be devastating for national economies and would require significant policy intervention to create new job roles or fund social welfare schemes.

Retail culture has also traditionally been driven by customer-centricity, a very human concept that involves understanding customers’ needs and delivering the right shopping experience to meet those needs. While AI can support this understanding, human-led retail can bring it to life. There are three key factors that could drive human primacy in the future of retail:

1. Emotional intelligence and human interaction

Humans are social creatures, and retail thrives on empathy and authenticity. Customer experience is commonly measured by the quality of the human interaction a retailer can provide. Even e-commerce has become more personalized due to the increasing impact of influencers and live stream shopping on consumer purchasing decisions. Physical stores remain the dominant channel and are expected to do so for the foreseeable future, even as e-commerce prevalence grows. According to Euromonitor², physical stores will still account for 72% of retail revenues by the end of the decade.

Efforts to remove the human element from physical shopping have been haphazard. The rollout of self-checkout has repeatedly come under scrutiny, with some retailers reinstating human cashiers in response to higher theft rates and poor customer experiences. Others have gone further, introducing checkouts especially for customers to talk to cashiers for a more human experience that addresses feelings of loneliness and isolation.

This divide between digital and physical experience is borne out by the EY Future Consumer Index, which found that 80% of consumers visiting physical stores try to shop at their preferred retailers, whereas 67% of consumers shopping online only purchase from whichever retailer has the cheapest price. Clearly loyalty to retail brands is more apparent when it is expressed as a physical, rather than digital, activity.

2. Trust and governance

AI raises privacy, bias and trust concerns. Although many consumers have relatively high levels of comfort in AI use cases, the Future Consumer Index found that only 29% currently make a purchase decision based on AI recommendations. The survey also found that 80% of consumers had moderate or complete trust in supermarkets and grocery chains, a significantly higher level of trust than online-only retailers (59%) and national governments (52%). While the EY AI Sentiment Index found that 46% of consumers feel comfortable with the concept of an AI assistant curating purchasing recommendations for them, this still means 54% aren’t comfortable with delegating decision-making in this way. Human oversight ensures accountability, ethical considerations, and context-based sensitivity AI regulations around the world are inconsistent and still evolving. Additionally, laws designed to protect personal data may hinder AI’s ability to create value and deliver a strong return on investment. With cyberhackers also using AI to target people with deepfakes and identity theft, customer trust could be determined more by what customers see and feel in the physical world than through digital channels.

3. Community, culture and creativity

Stores are not simply places where people shop. A retail future led by humans reflects the need for retailers to serve communities, create new experiences and innovate in different ways.

AI may tailor choices, suggest styles and optimize layouts; however, understanding community needs and driving creative reinvention remain the domain of humans.

This contributes to a shift in the way retailers understand and deploy their human workforce, with future skillsets focused on soft skills such as adaptability, analytical thinking and cultural literacy. Rather than focusing on delivering seamless transactions, human-led retail has the capacity to add more value, both financial and non-financial, through the services, experiences and interactions that humans can deliver above those of AI.

Digital and physical spaces can be reimagined not just for lean efficiency, but also to support meaningful, human-centered and socially enriching activities.

Shopping as a leisure activity remains something people do for their own well-being and retailers serve many roles in society as employers, community servants, charities and service centers that lie beyond the remit of AI.

A human-led future for retail will be distinguished by physical interactions, stickier retail experiences and a lack, or loss, of trust in the promises that AI can bring. Human-led retailers will be those that focus on the differentiating factors their talent can bring and on the need for customers to have social and community interactions. This might not mean that their primary activities are considered as retail but could see them focusing on how they can generate greater value from the relationships they build with their customers and the services and innovations they can deliver into the market. This will not just be through physical store networks but also online, where human influencers and content guide customer choices, without actively curating them. Stores themselves may operate more as community hubs that bring people together and serve multiple roles. Talent will focus on creativity and adaptability to actively differentiate from competitors and present alternative value propositions.

Retailers that rely solely on a human-led future may face disintermediation in terms of price and convenience, ultimately serving only a small, wealthy and loyal customer base.  Meanwhile, those anticipating an AI-led future may face a race to the bottom as heightened competition reduces margins and sector consolidation shifts competitive advantage to the few large players capable of delivering volume and scale.

For the bulk of retailers, the path ahead lies in finding a blend between AI efficiency and human creativity that will be shaped by their own strategic goals, subsector landscape and customer expectations. Some retailers will lean heavily on AI to scale operational efficiency, customer personalization and process automation. Others will double down on human-led differentiation by anchoring their competitive edge in emotional engagement, creativity and trust.

The most successful retailers will navigate their own path between the two, harnessing AI where it amplifies value and elevates human inputs where they see opportunities to differentiate. The real question is not whether the future of retail belongs to humans or AI, but how retailers can integrate both to define their path ahead.