How is artificial intelligence transforming the retail industry? According to retail experts, AI is dramatically changing how stores operate and serve customers. Major retailers like Target are using AI to create personalized shopping experiences that weren’t possible before.
AI allows retailers to analyze huge amounts of customer data, including what shoppers browse online, what they’ve bought before, and even factors like local weather. This helps stores create custom experiences for each shopper. About 51% of retailers now focus on personalized offers and promotions through their loyalty programs.
On the operations side, AI improves how stores manage their inventory. It helps predict what products will be popular, reducing problems like empty shelves or having too much stock. AI can also adjust prices in real time based on demand and what competitors are charging.
Supply chains are getting smarter too. AI gives retailers better visibility into their entire supply network, helping them spot potential problems before they happen. About 47% of retailers use technologies like RFID systems to track products more accurately throughout their journey to stores. The combination of AI and blockchain technology is revolutionizing supply chains by ensuring product authenticity and improving traceability from manufacturer to consumer. With 85% of retail executives having already developed AI capabilities, the industry is clearly recognizing the competitive advantage these technologies offer.
In stores, AI-powered cameras help prevent theft and fraud. These systems can monitor store activity and alert staff to suspicious behavior, cutting down on losses from shoplifting.
Customer engagement is another area seeing big changes. Around 45% of retailers use AI models to predict the best way to interact with each customer. AI also helps stores avoid sending irrelevant ads to shoppers, with 42% of retailers using AI to make their marketing more targeted. Similar to healthcare applications, AI-powered chatbots are projected to generate significant cost savings for the retail sector by 2025.
Chatbots and digital assistants powered by AI are becoming common too. They help answer customer questions and guide shoppers to find what they need, creating a smoother shopping experience.
As these technologies continue to develop, they’re changing retail from a one-size-fits-all approach to an industry that can adapt to each customer’s unique preferences and needs.
References
- https://blogs.opentext.com/from-experiments-to-expected-how-ai-is-fundamentally-reshaping-the-retail-industry-in-2025/
- https://business.adobe.com/assets/pdfs/resources/reports/retail-digital-trends/2025-ai-and-digital-trends-retail.pdf
- https://www.honeywell.com/us/en/news/featured-stories/2025/08/impact-of-ai-and-data-collection-on-retail-transformation
- https://www.cta.tech/articles/the-impact-and-use-cases-of-ai-in-retail/
- https://digiday.com/marketing/how-consumers-are-using-ai-to-shop-in-2025-by-the-numbers/
- https://amperity.com/resources/2025-state-of-ai-in-retail
- https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai
