Retail’s AI Bell Curve: Why Scaling Now is Critical
The buzz around artificial intelligence in retail has transcended mere novelty — it's a full-blown necessity. We’ve moved beyond the "Is AI relevant?" phase to "How fast can we scale it?" The numbers speak volumes: roughly 60 percent of retailers currently leverage AI, and a staggering 80 percent plan to boost their AI capabilities in 2025.
This surge has created a distinct AI bell curve, dividing retailers into three categories: the leaders, the “middle majority” experimenters, and the laggards. Understanding where you fall on this curve is critical for navigating the competitive landscape of tomorrow.
Let’s explore these three groups to help you pinpoint where your retail operation stands as well as look at how to put you beyond competitors and navigate concerns.
Shifting Decisively at a Critical Juncture
The current retail landscape reveals a stark reality. At the forefront are the leaders, or retail execs who have transitioned from piloting AI projects to full-scale AI integration. In the best cases, they leverage a fully managed, unified platform to optimize operations, enhance customer experiences, and drive efficiency. They've discovered that AI's true power lies in its ability to scale, not just in its individual models.
Then there's the "middle majority," a vast group of retailers that have dabbled in AI — think conversational commerce or basic automation. However, they've yet to commit to a scalable, enterprise-wide approach. For this group, 2025 is a pivotal year. It’s their make-or-break moment. Without a decisive shift from experimentation to comprehensive implementation, they risk falling behind.
Finally, there are the laggards. These retailers are facing an existential threat. In a market increasingly driven by AI-powered personalization, dynamic pricing, and rapid operational responses, these companies are at a severe disadvantage. Without AI-driven efficiencies, they'll struggle to compete on virtually every front.
Building an AI Strategic Playbook
The good news is that the barriers to AI adoption are lower than ever. Gartner predicts that by 2026, over 80 percent of enterprises, including retailers, will use AI to enhance operations.
If AI still feels daunting, you're not alone. However, getting started doesn't have to be overwhelming. Think of it as a strategic playbook to cut through the noise, build confidence, and take those crucial first steps.
One of the most common pitfalls I see is retailers chasing the latest AI models without considering the underlying infrastructure. The true AI advantage lies in flexibility, not just models. Retailers experimenting with disparate AI models often struggle to scale. The key to success is a robust, flexible platform that integrates multiple models and evolves with your business needs. Leveraging a fully managed, unified platform in this context not only streamlines integration across diverse AI models but also frees up resources, allowing retailers to focus on strategic innovation and rapid scaling.
Consider the success story of Best Buy. The electronics retailer began with conversational commerce powered by AI and gradually expanded to other AI-driven retail solutions. Crucially, Best Buy achieved this by leveraging scalable platforms that allowed it to integrate new AI capabilities as its needs evolved. Best Buy demonstrates that a flexible, platform-based approach is far more effective than a piecemeal strategy.
Boosting Customer Engagement and Content … All at Once
Getting AI right is crucial because the future of retail is undeniably AI-powered. Personalized shopping experiences, optimized logistics, and AI-assisted employees will define the next generation of retail. Merchants at the forefront will create the most compelling places to shop and work, while those lagging will struggle to attract both customers and talent.
The importance of scaling AI goes beyond retailers — it extends to their business partners as well. For example, a global ad agency can invest in the same type of unified platform approach adopted by leading retailers. This would allow it to integrate AI into creative workflows for retail and brand clients, enhancing consumer engagement and accelerating content creation.
Is your marketing or ad agency using AI? It’s a question worth asking.
Overcoming Roadblocks of Security, Governance, and Workforce Concerns
Addressing the roadblocks of security, governance, and workforce concerns around the usage of AI is paramount. AI success requires secure, enterprise-ready solutions, not just open-source models that pose security risks. Retailers in the leaders category use a unified platform, which safeguards customer data, streamlines compliance, and eliminates the vulnerabilities of a fragmented, model-by-model strategy.
Furthermore, it's crucial to dispel the myth that AI will replace jobs. Instead, AI augments workers, empowering them to make faster, smarter decisions. Retailers that deployed generative AI tools like chatbots during the 2024 Black Friday weekend reported 15 percent better conversion rates. This illustrates the tangible benefits of effective AI implementation, showing that the technology can drive significant business outcomes.
Scaling AI Means a Massive Opportunity and Competitive Advantage
The opportunity to scale AI is massive. According to recent projections, generative AI could potentially increase retail profitability by 20 percent in 2025, underscoring the financial imperative to scale AI initiatives.
In an AI-powered retail future, hesitation equals obsolescence — leaders will dominate, while those stuck in the middle of the bell curve risk being overtaken by faster, more agile competitors. This is the historical juncture to commit to a strategic, scalable approach because AI isn't just an experiment; it's a powerful tool for solving real business challenges.
Retailers must prioritize unified AI platforms over individual models, ensuring scalability and long-term success. The choice is simple: scale AI now or risk being left behind in a rapidly evolving retail landscape.
Paul Tepfenhart is the global director of retail at Google.
Paul Tepfenhart is the global director of retail at Google. He was previously senior vice president of omnichannel retail and innovation at San Antonio-based H-E-B, and has also held roles at Walmart, Evenflo, and Procter & Gamble.
