Recently, two tech giants made headlines in the retail world, unveiling cutting-edge AI-powered shopping solutions aimed at revolutionizing how retailers operate. NVIDIA introduced a generative AI-powered retail assistant, built using its AI Blueprints, while Google unveiled new tools to empower retailers to develop their own generative AI agents. These announcements highlight the rapidly growing role of AI in retail, particularly from the perspective of retailers themselves. From optimizing inventory management to creating personalized shopping experiences, AI is becoming an essential tool for staying competitive in an increasingly complex marketplace.
One of the most transformative ways AI is impacting retail is through personalization. AI is enabling hyper-targeted shopping experiences by analyzing customer behavior, preferences, and even demographic data to deliver tailored recommendations. This trend is critical for driving sales, as shown in CTA’s 2024 AI in Shopping study, which found that 43% of U.S. shoppers are more likely to purchase from a brand that offers a personalized shopping experience. Furthermore, 39% of shoppers are more likely to engage with brands that provide personalized recommendations.
While household names like Amazon and Netflix have long utilized AI for recommendations, smaller businesses are also increasingly leveraging these technologies. According to a study by Constant Contact, over a third of small businesses using AI are applying it for targeted advertising, with at least one in five citing knowing their customers better as a key benefit, offering more personalized contact.
This trend isn’t confined to e-commerce. In some brick-and-mortar stores, AI is enhancing the shopping experience through in-store tools like interactive augmented reality (AR) smart mirrors and virtual assistants. These systems provide personalized product recommendations and even assist customers in real-time, improving both the shopping experience and customer satisfaction. In fact, more than four in 10 recent shoppers have used an AI-powered shopping tool in-store before and four in five past users considering using again in the future, signaling a growing demand for AI-driven features in brick-and-mortar environments.
From the consumer’s perspective, the growing acceptance of AI tools is evident: CTA’s report reveals that 40% of online shoppers are open to using virtual try-on tools for apparel, while 46% are interested in view-in-your-room technology for furniture and home goods. These technologies represent the future of personalized shopping, combining AI with augmented reality (AR) to help consumers make more informed decisions.
One of the most impactful applications of AI in retail is inventory management. According to Forbes, 40% of companies using AI are deploying it to optimize inventory. Certain tools can predict inventory demand patterns based on traditional factors such as historical data, but also weather patterns, local events and even social media trends, to ensure retailers have the right products at the right times. This predictive capability improves operational efficiency, which is crucial for both small and large retailers.
While personalization and inventory optimization might be the more commonly known AI use cases by retailers, other innovative applications are rapidly emerging:
The rapid adoption of AI-powered tools and solutions in the retail industry is a clear indication that AI is no longer a futuristic technology — it’s here. Research shows that in 2025, four in five retailers plan to expand their use of AI and automation, further accelerating the AI-driven transformation of retail.
And as the retail sector continues to embrace these technologies, it’s clear that technology will continue to redefine the landscape, driving new efficiencies, enhancing customer experiences, and ultimately reshaping the industry.