The retail industry is experiencing a transformative evolution, driven by the rapid advancement of artificial intelligence (AI). As consumers increasingly demand personalized experiences and seamless transactions, retailers are turning to AI technologies to meet these expectations.
From optimizing inventory management to enhancing customer engagement through tailored recommendations, AI is reshaping how businesses operate and interact with shoppers. This growth is not only streamlining processes but also creating innovative shopping experiences that were once unimaginable. As major players in the retail sector embrace AI, the landscape is set for a revolution that will redefine the future of commerce.
By 2029, according to IHL Group, the worldwide impact of AI on the retail industry through 2029 will be an astounding $9.2 trillion. Seventy-two percent of the benefit will be to retailers over $1 billion in size.
The segments that will dominate economic benefits through 2029 are pure play e-commerce, food/grocery, mass merchandisers/hypermarkets, and specialty hard goods. The majority of the economic benefit to retail will be increased sales.
This article examines the impact of AI in the retail industry, the retail companies leading the way, the primary AI applications, and what ChatGPT tells us AI will deliver in the next ten years.
2025 Retail Technology Priorities
Warehouse automation and omnichannel investments are the top priorities for retailers in 2025, but AI is not that far behind.
Grocery has the highest AI investments in 2025, followed closely by home goods. RFID is a technology that is getting increased traction in all sectors. Falling way behind is the Metaverse, which has fallen in percentage since last year.
2025 AI Retail Priorities
As presented by the Greg Buzek from the IHL Group at SuperSaturday 2025, here are the top AI retail priorities for 2025.
Customer service and support dominates, but note the growing importance of AI in supply chains and loss prevention. Retailers leveraging AI experience 2.3X sales and 2.5X profit growth.
Retail is just getting started with AI with 68% only having it applied in some areas. Only 16% of retailers have a well-defined AI strategy and an additional 16% are in the wild wild west of still trying to figure it out.
The Retailers Leading AI Adoption
It is probably not a surprise that Amazon leads all of retail in AI readiness and financial impact to their business, followed closely by Walmart.
For Amazon the potential AI financial impact totals $353.7 billion through cumulative sales, margin, and SG&A impacts. Walmart has total overall AI financial impact of $264.2 billion.
By sector, starting first with Fast Moving Consumer Goods (FMCG), Walmart is the leader in AI readiness follow
In apparel, lululemon leads followed by Designer Brands. It’s surprising, some of the major retailers missing from these AI readiness leadership lists.
The Home Depot leads the hard goods sector followed by DICK’S Sporting Goods.
CVS leads health and beauty AI readiness followed by Ulta Beauty. You can read a lot more about these retailers and their AI readiness, including the financial impact, by following this hyperlink.
AI in Retail Is Just Getting Started
Tech prophet Mary Meeker, known globally for her research on internet trends, recently published a 340 page analysis of AI’s global impact in 2025. By 2030, Meeker predicts that AI’s impact on jobs and productivity will be profound. AI will move from being an add-on feature to the core of new products and workflows, fundamentally altering how software is built and how businesses operate. We’re already seeing this trend. The top six US tech companies invested over $200 billion in AI and infrastructure last year, signaling a shift to AI-native platforms and business models.
Retail is a laggard industry to the adoption of AI, ranking 11th as of March 2025.
For retail, on many levels, AI adoption is just getting started. The pace needs to speed up, especially when you consider one of my other favorite charts from the Meeker report on what ChatGPT is predicting for this disruptive technology, ten years from now
Multiple of the above will have a major impact on the retail industry. As I have stated many times, the successful retail future will include deeper more impactful immersive consumer experiences supported by digital savvy highly knowledgeable virtual and store associates. AI will play a paramount evolutionary role in creating it.