Humans + AI: Transforming the Future of Retail Customer Service

By Brad Birnbaum

The success of Black Friday and Cyber Monday last year was monumental. Adobe Analytics reported record-breaking online sales of $10.8 billion and $13.3 billion, respectively — an impressive 10 percent increase from 2023. This surge wasn’t just due to deep discounts and deals; artificial intelligence was a gamechanger. AI-powered tools like chatbots and virtual agents contributed to a staggering boost in retail site traffic by helping shoppers discover deals, receive personalized recommendations, and better navigate checkout.

While AI’s contributions to this success are undeniable, it’s not a standalone solution. The future of retail customer service lies at the intersection of human empathy and AI-driven efficiency. This powerful combination offers retailers the ability to exceed customer expectations, building trust and loyalty well beyond the holiday shopping season.

Why Humans Are Still the Heart of Exceptional Customer Service

Even with the rapid evolution of AI, human agents remain irreplaceable. They bring emotional intelligence and empathy to customer interactions, especially in high-stakes or sensitive situations. For instance, if a customer has recently reported fraud, a human agent equipped with detailed customer insights can approach the conversation with added care and understanding.

This highlights the importance of AI as an enabler, not a replacement. By integrating AI into customer service workflows, businesses can provide agents with the context and tools they need to personalize interactions and anticipate customer needs. According to McKinsey research, 72 percent of shoppers said they expect the businesses they buy from to recognize them as individuals and know their interests, and they respond positively when brands demonstrate their investment in the relationship, not just the transaction.

How AI is Supercharging Retail Experiences

It’s worth repeating that AI isn’t just a tool for automation; it’s a catalyst for smarter, more proactive service. As McKinsey reports, companies that adopt AI in their business operations see a 20 percent increase in customer satisfaction.

Anticipating Customer Needs With Proactive CX

Customer service success often hinges on solving issues before they arise. This needs to start at the very first moment a customer engages with your brand — at "hello," not "help." This means using AI to predict potential issues (e.g., shipping delays or inventory shortages) and addressing them proactively, hopefully avoiding frustration and boosting customer retention in the process.

Simplifying Returns and Post-Purchase Interactions

AI-driven solutions are transforming the returns process into a seamless experience. Automated systems can guide customers through self-service returns and provide instant updates. However, for more complex or emotionally charged situations, human agents remain essential.

Smarter Tools, Better Outcomes

AI-native platforms are introducing cost-efficient and scalable CX solutions. They can analyze vast amounts of data in real time, providing actionable insights for both human agents and supervisors. Some tools are even introducing dynamic pricing models based on consumption, not predetermined licensed seats.

The Road Ahead: Achieving Harmony Between Humans and AI

As AI continues to evolve, its role in retail customer service will become even more integrated. It’s not about choosing between AI and humans though; it’s about combining their strengths. AI can handle repetitive tasks, provide data-driven insights, and anticipate customer needs, while human agents bring emotional intelligence and creativity that technology can’t replicate.

Retailers that embrace this hybrid approach will not only enhance CX but also gain a competitive edge in a highly crowded marketplace. After all, the end goal isn’t just to meet customer expectations — it’s to exceed them.

Brad Birnbaum is CEO and co-founder of Kustomer, an omnichannel customer service platform.