Retailers from around the world will gather at the National Retail Federation Big Show in New York this week to learn new ways to automate the sales experience.
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AI is already changing the way we shop. We are currently transforming the way retailers operate their businesses.
Technology companies and major retailers this week announced new tools that greatly expand the ability of AI agents to make autonomous business decisions, including complex tasks such as pricing, employee scheduling, customer interaction, and supply chain management.
These AI announcements were made in conjunction with the National Retail Federation's annual conference and trade show, which opened today in New York City.
AI has been a major topic of conversation for retailers over the past two years. But the focus is now shifting from early-stage AI tools like chatbots and virtual assistants to more advanced systems that can automate decisions about how stores and e-commerce businesses operate.
The age of agent commerce has arrived
“In the first part of the AI era, the business conversation around AI was about efficiency: How do you improve a single step or a single use case? How do you make small changes to recommendations or improve predictions? That idea is rapidly becoming obsolete.”
“Retail is moving from a digital-first era to an agent commerce era,” Tharp said. “Here, AI moves from a passive tool that provides predictions to an active, autonomous resource that is an agent that can perform complex, multi-step, prescriptive actions across all consumer and operational touchpoints.”
The three-day convention, dubbed “The Big Retail Show,” is expected to attract more than 40,000 retail professionals from more than 100 countries, as well as technology and service providers, retail analysts, and media members.
Of the 74 information sessions scheduled for today, the first day of the convention, 33 focus specifically on AI, with more than half addressing the need for and potential value of agent-based AI systems capable of independent decision-making and task completion.
AI lags execution behind ambition
However, while retail executives recognize the importance of using agent AI, adoption has so far been slow, according to a global survey released today by Tata Consultancy Services (TCS).
Cheenttan Voraa, Global Head of Retail Consulting at TCS, says, “Everyone agrees on what to do, but they are really struggling with how to do it.” “What we are seeing is that execution has lagged behind ambition.”
A survey of more than 800 retail executives conducted for this study found that only 24% of retailers are currently using AI for autonomous decision-making, and 51% are still at the stage where basic AI technologies such as chatbots and virtual assistants are their top AI initiative.
Tata Consultancy Services (TCS), which had a booth at last year's NRF show, will be meeting with clients this year to discuss perceptual retail that aligns business objectives with advanced AI capabilities.
Tata Consultancy Services
One new use case for autonomous decision-making is pricing. “The entire pricing value chain is being transformed by AI,” says Voraa. AI agents can quickly compare competitors' prices and make changes according to guideline thresholds set by human employees.
A TCS study found that smartly deploying the right AI tools can be the difference between winners and losers for retailers. Research shows that the more financially successful a retailer is, the more AI initiatives it has in its pipeline.
Google announces new AI tools and retail partnerships
Google today made a number of important announcements regarding new AI products and retail partnerships. New AI tools include advances that allow consumers to purchase products directly from AI-mode searches and receive exclusive discounts from advertisers while searching for product information.
An example of how Google's next level of AI-powered search can help shoppers discover products while receiving discounts.
Key to these new features is the Universal Commerce Protocol. Universal Commerce Protocol is a new open standard for agent commerce that establishes a common language for agents to work together across different payment providers and transact with any merchant. Developed by Google in collaboration with Shopify, Etsy, Wayfair, Target, and Walmart, it is backed by major retailers and financial companies including Best Buy, Macy's, Home Depot, American Express, Mastercard, and Visa.
Walmart U.S. President and CEO John Farner and Google CEO Sundar Pichai announced at the NRF Show that Walmart is partnering with Google to use Universal Commerce Protocol to enable shoppers to discover and buy Walmart and Same's Club products using Google's Gemini AI assistant app.
“The shift from traditional web and app search to agentlet commerce represents the next big evolution in retail,” Farner said during the announcement of Gemini and Walmart's new shopping experience. “We're not just seeing change, we're driving change,” he said.
Home Depot today announced that it is expanding its strategic partnership with Google Cloud to develop a better AI shopping assistant that takes questions in the form of voice, text, and images and provides conversational and personalized advice on home projects ranging from plumbing repairs to complete kitchen remodels, including what products to buy and exactly where Home Depot is located. The retailer uses Google AI tools to provide additional services to its professional customers, creating a smarter delivery system and improved customer service platform.
Google also announced a new, sophisticated shopping agent that lets you independently manage every step of the customer journey, from initial product discovery to post-purchase issue resolution. It can also understand audio and images, convert photos of handwritten recipes into shopping lists, and add ingredients to a digital shopping cart for purchase.
In a media briefing ahead of today's announcement, Tharp said Google is addressing key challenges facing its retail partners with these new solutions.
Shoppers are evolving rapidly and retailers need to catch up
“Shoppers are rapidly evolving,” Tharp said. “People are already moving toward conversational, AI-driven discovery, asking longer and more complex questions than ever before.” While the majority of consumers want AI to assist them with their purchasing decisions, “most retailers are still in the early stages of evolving discovery,” she said.
“The modern customer journey is highly fragmented, with shoppers moving between apps, search, and physical aisles,” Tharp said. “The experience still often feels broken due to legacy systems that don't communicate with each other, and in today's hypercompetitive world, shopping complexity not only frustrates shoppers, but also causes them to bounce.”
AI agents are becoming increasingly capable of solving customer problems. According to Salesforce's post-holiday report, these agents took center stage during the holiday season, taking direct action on behalf of customers and completing 142% more tasks than they had in the two months leading up to the holiday.
According to Salesforce, shoppers are embracing AI agents more than ever, using 126% more AI agents for customer service during the holidays compared to the previous two months.
