This article is provided by BRC Associate Member Microsoft


Amidst all the rapid progress in AI, it’s easy to get caught up in what the technology can do in theory or what it might achieve in future. Yet for retailers, a more immediate path to success lies with focusing on what their organisation needs in practice and how AI can help them achieve it right here, right now.

This begins with adopting the correct mindset. Like data, AI is only valuable if you actually do something useful with it. So, rather than viewing it as an isolated technology project, firms should approach AI deployment as a holistic, business-led transformation. Doing so, can improve life for staff and customers while optimising costs and unlocking new streams of revenue.

The quicker they move from experimentation to pilot to production, the better too. Even small accelerations in staff workflows and/or incremental enhancements in the customer experience can act as a catalyst for wider change—and retailers will get there faster by empowering staff to take a trial and error approach to innovation. Learning by doing, in other words.

Successful retail AI transformation projects also require collaboration across the organisation, so gaining the early support of leadership along with senior decision-makers from HR, Legal and IT is important. Laying this foundation from the outset ensures projects begin with business objectives in mind and follow a thoughtful framework for ethical and responsible use. It also enables faster experimentation and iteration later on.

Better for staff, better for shoppers

If this still sounds like theory, it isn’t. While the technology may feel new, leading retailers are already using AI to change their operating models, building on existing investments in cloud, analytics, and automation to reshape everything from how people work and how they access and manage data, to the way customers engage with their brand.

For many of these early movers, the initial focus has been on opportunities that don’t require major upfront investment but still deliver a notable internal impact and relatively straightforward deployment at scale. Frontline staff training is a good example and we’re already seeing retailers integrate user-friendly AI tools like Microsoft Copilot into the productivity apps staff use every day. Because these are accessible via mobile devices, questions can be asked (and answered!) on the spot, thereby reducing induction time and mitigating mistakes, including among temporary workers employed at peak times of the year.

By shifting straightforward or mundane tasks to AI, firms can also free up staff to focus on the more complex, high-value elements of their jobs, such as dealing with nuanced customer requests, developing better ways of working or targeting new market segments. Multiply those savings across hundreds of workers in dozens of locations and the cumulative effect on productivity, cost and performance is extraordinary.

The impact doesn’t stop with workers either; through the smart deployment of AI, retailers can dramatically improve experiences for customers too. AI-powered apps using natural language prompts can make it easier for people to get support before, during and after their transaction. This, in turn, creates better, more frictionless interactions for customers while reducing the pressure on service teams, especially in areas like product assembly and installation.

Loyalty programmes—a vital driver of differentiation for retailers—can also be significantly improved using AI. Firms can automate and personalise member communications, delivering carefully targeted product recommendations and marketing messages based on their unique buying history. This increases the likelihood of repeat purchases and advocacy.

The edge of today

Whatever the precise nature of their AI transformation strategy, the key for retailers is ensuring that it’s centred around business objectives, not technological ones. Likewise, the implementation of that strategy must constantly gather pace rather than become stuck in the kind of analysis paralysis many have experienced when trying to embed new technologies in the past.

First, because doing so is likely to be ever-more important to gaining and retaining a competitive edge. (McKinsey estimates generative AI alone could deliver a revenue increase of up to $660 billion each year for the retail and consumer packaged goods sectors as a result of enhanced customer loyalty and greater operational efficiency.) But also because with each AI success, company-wide confidence in the technology grows, momentum builds and progress becomes exponential.

At a time of unprecedented levels of interest in AI—from the shop floor to the boardroom, from the office to the home—retailers have a generational opportunity to turn its near-limitless potential for tomorrow into real, meaningful benefits for their customers, their people and their business today. As Kate Ancketill, CEO of retail strategy consultancy, GDR Creative Intelligence, puts it, “People are clearly demonstrating an appetite for using conversational AI tools and integrating them into their everyday lives. The comfort with using the technology is already there, it’s just a question of how quickly more retailers can start capitalising on it.”