Artificial Intelligence (AI) has been hailed as the future of retail, powering everything from self-checkout stations to chatbots and personalized shopping recommendations. In 2024 alone, US e-commerce retailers spent an average of $400,000 on AI tools to enhance operations and improve the customer experience. The promise? Frictionless service, increased efficiency, and smarter decision-making.
Through the use of AI, retailers aim to deliver a frictionless experience and cut down the number of redundant tasks; however, despite major retailers doubling down on AI, its effectiveness among consumers is still questionable.
But as AI adoption accelerates, consumers are showing signs of discomfort. A recent SCAYLE survey of 1,500 US shoppers found that 71% expressed concern over the use of AI in retail. While automation may appeal to time-poor shoppers, many still crave the human interaction, reassurance, and personal service that digital tools can’t replicate. This raises a critical question: is the retail industry’s AI obsession actually alienating the very people it’s trying to serve?
Retailers at the forefront of AI initiatives
Despite the consumer concerns, a large number of retailers are tapping into AI technology as part of their business. AI technologies, including chatbots and virtual assistants, provide customer support in real time, utilizing natural language processing to generate responses to customers’ queries and any other inquiries. Home improvement retailer Lowe’s recently teamed up with OpenAI to launch an app built on generative AI to respond to customer prompts, optimize searches, and give practical solutions for customers’ questions.
The app’s debut was successful and was followed by the launch of a similar application to help in-store merchants. It’s industry rival Home Depot also entered into the AI arena, launching its own suite of generative AI tools earlier this year called Magic Apron, designed to boost the customer experience and respond to questions.
Meanwhile, Walmart has implemented “Wally,” an AI assistant that helps merchants with tasks such as trend analysis, data entry, and inventory planning. According to the company, this allows teams to shift focus away from manual admin and towards creativity, strategy, and innovation.
Chandhu Nair, SVP of Technology at Lowe’s, summarized the sector’s mindset: “We’re doubling down with emerging technology collaborators like OpenAI to solve problems for our customers and because we want the home improvement experience at Lowe’s to be a cut above.”
Consumers’ mixed responses
While AI might offer operational efficiency, it doesn’t always land well with consumers. Target quietly ended some of its self-checkout stations across its stores after consumer frustrations over safety and theft. A survey by Redfield & Wilton found that 40% of Americans dislike self-checkout because they prefer interacting with staff, while 62% said it removes jobs, a concern that underscores growing discomfort with automation. This signals a shift in sentiment towards fully automated operations in retail, which businesses have to take into consideration.
A customer feedback solutions company conducted a survey that revealed that staff friendliness was the top highlight for customers in that year, a gap that AI adoption cannot fill. Miika Mäkitalo, CEO of HappyOrNot, commented: “As we look to return fully to post-pandemic norms, it has become clear that customers are once again seeking the human interactions and bespoke customer service that have largely been absent in recent years. Our data implies a renewed appreciation for the warmth and assistance of high-quality customer service and offers an explanation as to why consumer attitudes have changed.”
Not all shoppers feel the same however, with fashion retailers popular among younger consumers adopting AI tools to their advantage. Online handcraft and vintage resale marketplace Etsy reported successful results from deploying a suite of AI tools made in collaboration with OpenAI and Microsoft Copilot. AI was used to create push notifications and enhance personalization, which in turn led to a higher buyer conversion rate and more active users.
Emma Thompson, Head of Agency at Golley Slater, summed up the divide: “AI is making checkout quicker and cleaner in fashion and FMCG, especially for younger shoppers who are comfortable with automation and rarely flinch at data sharing. You see it in places like Zara or Amazon Fresh. Low-friction, human-free exits that just work. But it falls down where shoppers want reassurance, especially in supermarkets with older demographics who don’t trust self-checkouts, let alone invisible tech running the show. The tech’s outpacing people’s readiness to trust it, and that gap isn’t closing anytime soon.”
Iain Banks, Ventrica CEO also commented on the gap that AI cannot fill: “AI can be transformational when applied to the right use cases, and it can significantly speed up customer support delivery as well as checkout time. We’ve seen many brands use AI successfully to create visibility of a customer’s end-to-end journey and pull out insights that can help them create new touchpoints. Yet, the biggest mistake retail brands make is thinking AI can be used to replace human employees, whether at checkout or throughout the customer experience. AI still needs humans to refine outcomes and ensure it is being trained on complete and accurate data. A passive approach to AI implementation results in a clunky experience for customers.”
This marks a consideration point for retailers: AI needs to be balanced with human interaction to optimize its overall capabilities. By bridging customer service and modern technology tools, shoppers will automatically feel better when using AI.
A successful example of AI use in retail is online styling platform Stitch Fix, which merges AI and human interaction, which in turn resulted in an improved turnover for the company. Its workflow includes AI tools searching for outfits while human stylists curate the pieces together to add an element of human creativity. The company’s revenue inched up by 4% in that quarter to $537 on average following the deployment of the program.
Noah Zamansky, VP of Client Experience at Stitch Fix, said to Retail TouchPoints: “We’re always looking at how we can actually achieve this balance and not overswing in any one direction. But the magic, we believe, happens when we’re able to marry that human creativity with science.”
The road ahead: augmentation over automation?
As AI becomes embedded in the fabric of retail, success will depend on how well it complements, not replaces, the human experience. For some sectors and demographics, AI can offer speed, efficiency, and convenience. But for others, it risks eroding trust, reducing loyalty, and alienating those who value real human service.
Retailers betting big on AI would do well to ask not just what automation can do, but where it genuinely adds value. After all, technology may power the transaction, but the industry is telling us that people still drive the experience.
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