Can GenAI actually change how people shop? | Reimagining Retail

Summary

Behind the Numbers: An eMarketer Podcast Summary

Episode Title: Can GenAI Actually Change How People Shop? | Reimagining Retail
Release Date: May 14, 2025
Hosts: Sarah Lebo
Guests:

• Karina Perkins, Retail Analyst
• Yori Wormsler, Tech Analyst

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Introduction

In this episode of Behind the Numbers: Reimagining Retail, hosted by Sarah Lebo, eMarketer delves into the transformative role of Generative Artificial Intelligence (GenAI) in the retail sector. Joining Sarah are Karina Perkins from the retail desk and Yori Wormsler from the tech desk. The discussion centers around whether GenAI can fundamentally alter the shopping experience and reshaping the retail landscape.

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Setting the Stage: The Rise of GenAI in Retail

Sarah begins by highlighting recent advancements in GenAI, citing Mark Zuckerberg’s assertion that "Facebook's AI tool is like the ultimate business results machine" (01:06), and Amazon's introduction of Nova Act, an AI agent capable of performing autonomous actions on behalf of consumers. These developments underscore the growing influence of AI in automating marketing and shopping processes.

True or False: The episode kicks off with a pivotal question: "Generative AI in retail will change how people shop." Both Karina and Yori agree with a resounding True but emphasize nuances in the extent and nature of this change.

• Karina Perkins (02:11): "AI is causing a shift in the shopping landscape, with tech companies aiming to own the commerce journey."
• Yori Wormsler (03:04): "All parts of the marketing stage are going to be transformed by AI and agents, though consumers will still want final decision-making power."

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The Current State of GenAI in the Shopper Journey

Karina outlines the pervasive integration of GenAI across various stages of the shopper journey:

• Discovery: AI-generated ad campaigns and product recommendations.
• Search: Enhanced AI-driven search capabilities.
• Customer Service: AI-powered support and review summaries.
• Loyalty Programs: Personalized AI-managed perks.

She notes, however, that while these applications are widespread, they often encounter consumer friction and a significant focus remains on pre-purchase activities rather than post-purchase pain points (03:47).

Yori adds that while discovery and consideration phases are already impacted by GenAI, backend processes like merchandising benefit significantly without altering the visible shopper experience (04:36).

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Impact of Agentic AI on Shopping

Agentic AI, defined as AI entities making purchase decisions on behalf of users, is a key focus area.

• Technologists’ Vision (Yori, 06:19): Agents will anticipate needs, suggest products, and handle time-sensitive or routine purchases, enhancing every stage of the shopper journey.
• Consumer Autonomy (Karina, 07:00): The adoption of agentic AI will vary based on product type. Routine purchases like diapers or dog food may see higher acceptance, whereas emotionally driven purchases like clothing may retain the need for human interaction.

Challenges:

• Trust and Desire (Yori, 05:21): Consumers may be hesitant to trust AI fully with their purchases.
• Enjoyment of Shopping (Karina, 05:46): Many consumers derive pleasure from the shopping process itself and may resist automation.

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Overhyped Aspects of GenAI in Retail

Yori argues that automated buying is overhyped, particularly among older demographics who may be reluctant to adopt such technologies (08:35).

Karina contends that seamless personalization is overhyped as current AI often fails to deliver accurate, meaningful recommendations. She cites a survey indicating "one in five consumers say that recommendations are still way off base" (08:35).

Sarah reinforces this by reminding listeners that "80% of shopping still happens in-store," emphasizing that much of the potential impact of GenAI applies to a smaller segment of the market (09:31).

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Underappreciated Areas and Advice for Retailers

Yori points out that agentic AI can also transform in-store experiences by leveraging technologies like image recognition for real-time reviews and price comparisons (10:12).

Karina emphasizes the overlooked importance of the post-purchase experience, suggesting that retailers should focus on leveraging AI to simplify returns, enhance loyalty programs, and improve delivery tracking (12:17). She asserts, "Retailers that use AI to fix post-purchase pain points are going to be the winners."

Yori adds that optimizing for generative search will become crucial, as AI agents will rely heavily on accurate reviews, price data, and product specifications to make informed recommendations (13:25).

Advice from Guests:

• Karina (16:16): "Focus on day-to-day frictions, make experience seamless for consumers."
• Yori (17:00): "Focus on first-party data to design better products, market effectively, and enhance personalization."

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Future Outlook and Final Thoughts

Sarah reflects on the limitations of current AI integrations, questioning the practicality of AI agents making complex purchasing decisions without human oversight (13:53). Both Karina and Yori concur that while AI can handle mundane tasks, the nuanced and emotional aspects of shopping will still require human involvement.

Yori optimistically highlights the potential for virtual try-ons and augmented reality tools to reduce the need for in-store trials, enhancing the online shopping experience (14:51).

Karina concludes by advising retailers to prioritize solving everyday shopping frustrations with technology before pursuing more ambitious AI-driven transformations (15:38).

Final Takeaway:

• Karina: "Focus on the basics. Get the basics right and then explore transformative shopping experiences."
• Yori: "Prioritize first-party data to ensure effective AI integration and personalization."

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Conclusion

The episode underscores that while GenAI holds significant promise for revolutionizing retail, its successful implementation hinges on addressing current consumer hesitations, improving personalization accuracy, and enhancing the post-purchase experience. Retailers are advised to build a strong foundation by resolving everyday shopping challenges before leveraging more advanced AI capabilities.

Notable Quote:

• Karina Perkins (16:16): "Focus on the basics. Get the basics right and once you've got the basics right, then you can start looking at wonderful, transformative new shopping experiences."

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This comprehensive discussion by eMarketer encapsulates the current landscape, challenges, and future potential of Generative AI in retail, providing valuable insights for marketers, retailers, and advertisers looking to stay ahead in the digital media landscape.

Transcript

[Sarah Lebo]

In today's economy, every ad dollar counts. That's why performance marketers are turning to ROKT ads to reach over 400 million active shoppers in the transaction moment when they're completing a purchase online. You only pay when customers engage. Learn [e-mail] eMarketer that's R-O-K-T.com eMarketer hello listeners. Today is Wednesday, May 14th. Welcome to behind the Reimagining Retail, an Emarketer show made possible by rokt. This is the show where we talk about how retail collides with every part of our lives. I'm your host, Sarah Lebo. Today's episode topic is Generative AI in retail. Let's meet today's guests. Joining me for today's episode, we have one of our analysts from our retail desk, Karina Perkins. Hey Karina.

[Karina Perkins]

Hi Sarah. Thanks for having me back.

[Sarah Lebo]

Thanks for being here. And also as an analyst from over on our tech desk, Yori Wormsler. Hey Yori.

[Yori Wormsler]

Hey Sarah.

[Sarah Lebo]

Welcome back to the podcast.

[Yori Wormsler]

Great to be here.

[Sarah Lebo]

Okay, let's talk about generative AI, everyone's favorite and least favorite topic. I'm gonna start with setting the stage. Last week Mark Zuckerberg said marketing is dead. Well, at least he said it's dying. Mark Zuckerberg said in a way, Facebook's AI tool is kind of like the ultimate business results machine. I think Meta's AI marketing tools will be one of the most important valuable AI systems that gets built. He essentially said that Facebook's AI, Meta's AI is going to be able to do all of marketing without marketers having to do anything. Around the same time, Amazon released Nova act, an AI agent that can independently perform actions, moving us further toward AI agents buying on consumers behalf of. And also happening around the same time, ChatGPT started surfacing product recommendations in its feed. So I'm going to start with a basic, not basic question that I'm going to make both of you answer true or false. Generative AI in retail will change how people shop. Carina, you're writing the report on this. So true or false?

[Karina Perkins]

Yeah, I mean, I think true in a lot of ways. I think it's already having some influence on how people shop. Will we see the extremes that some people are predicting or Zuckerberg would like to see is perhaps a different question. I think he's also just said that we're going to replace all of our friends with AI. So that's another interesting point, but I think what we're really seeing here is that AI is causing a little bit of a shift in the kind of shopping landscape. And we're seeing tech companies really go for a kind of grab of commerce rather than just supporting it. They really want to become part of the shop journey and own the commerce themselves. And I think that's probably where we're going to see the biggest shifts happening in the next couple of years.

[Sarah Lebo]

That makes sense. I mean, tech companies have been trying to own commerce since their inception. Yuri, true or false? Generative AI will change how people shop.

[Yori Wormsler]

True. Although I agree with Karina that Zuckerberg's comment is probably going to go down with his predictions about the metaverse. I definitely think, speaking specifically about marketing, that all parts of the marketing stage are going to be transformed by AI and agents. Marketers will still want control and the same thing is true of consumers. They're still going to want to be the final decision maker on a lot of purchases, most purchases, probably almost all purchases. There are going to be a lot of changes, but a lot is still going to stay the same.

[Sarah Lebo]

Okay, so let's start with current state. Karina, you're writing about this right now. How is generative AI already being used along the shopper journey?

[Karina Perkins]

Yeah, I mean it's being used pretty much everywhere from discovery through to delivery. So we're seeing people using AI for kind of AI generated ad campaigns, product recommendation, AI search, customer service review summaries and even loyalty perks. But it's not without friction. So we're seeing implementation of those tools are being met with slightly different consumer responses. And also what we're seeing is that there's a lot of focus on the kind of marketing and the discovery element from brands when consumers are actually most interested in AI solving those post purchase pain points.

[Yori Wormsler]

No, I mean Karina is exactly, I think on point on both points. Discovery I think is going to be has been affected to some extent and definitely the consideration phase is already being affected by generative search.

[Sarah Lebo]

Yeah, and generative AI is also obviously helping on the back end already. I think that's where it's most useful, merchandising things like that, where customers can't see it. Because this is something that you wrote Yori in a report that technologists may be underestimating how much a lot of consumers don't like AI in their journey.

[Yori Wormsler]

The pace of development of the technology, the underlying technology is just mind blowing. Every day there's not one advanced or a couple advances. We're going to get to the point not that long from now where you'll be able to buy things automatically, easily. I'm unsure how quickly consumers are going to trust that. That, that I think is going to be the biggest factor holding back automated buying.

[Karina Perkins]

I think Yuri's got a really good point there. And it's not just how much they're going to trust it, but it's how much they want it. Because I think if we're talking about completely automating shopping, we are forgetting that some people enjoy the shopping process and they get endorphins from buying things. They enjoy the discovery. So I think that again, maybe that's slightly underestimated how much still really want an active role in shopping.

[Sarah Lebo]

Yeah. And what we're getting at here is agentic AI. Agentic AI is when AI moves from being like copilot or a helper for the end user to being the actual entity making decisions and in this case making purchase decisions on behalf of the user. Did I get that definition right, Yori?

[Yori Wormsler]

Yeah, I mean it's basically it's a task oriented program that does what you want it to do.

[Sarah Lebo]

So how do retailers and technologists expect agentic AI will impact the shopper journey? How do you guys expect it will impact the shopper journey?

[Yori Wormsler]

Technologists envision a future where these agents will anticipate what you want, will suggest things for you or even buy things for you if it's time sensitive or it's something that's somewhat routine and will help you in pretty much in every stage of the, the shopper journey.

[Sarah Lebo]

And what am I doing in the meantime? Am I just like working more? Like what am I up to during that time?

[Yori Wormsler]

Yeah, I mean it frees you. I think the thought is it frees you from the parts of shopping you don't want to do. And I actually think some people will really buy into it. The question is how many people? I have no doubt that there are going to be millions of early adopters that will be really into this stuff. But others I'm not so sure about.

[Karina Perkins]

It will really depend on what your. So it's great for auto replenishment, it's great for things that are boring to buy, diapers, dog food, things like that. But it's perhaps less exciting for things where the kind of discovery and the research is more emotional. So clothing and things like that. So I think it's really going to have a different impact depending on what kind of products we're talking about.

[Sarah Lebo]

Yeah, I see it as useful for maybe like industrial shopping, buying supplies for an office, for example. Even for replenishment though, I mean not everyone uses subscribe and Save on Amazon and that is available to them. If people aren't using that, then why would Amazon believe those people might use a robot that then picks what they're subscribing to and saving on?

[Karina Perkins]

Essentially, it does reduce customer control a little bit. And transparency is going to be really key here because there is a potential that these. It's going to reward whoever has the best AI integration rather than what is the best product for the consumer. And I think unless there's a real transparency around how it's coming to conclusions or coming up with decisions and products and suggestions, that's actually just really going to put consumers off because things like kind of sponsored product listings are already creating a little bit of friction. And I think if consumers feel that they're just being served something which is just, you know, repetitive or not actually the best product for them, that's going to be a real problem.

[Sarah Lebo]

Yeah, I mean, let's, let's talk more about problems. What is something in generative AI in retail that you each feel is being overhyped right now?

[Yori Wormsler]

Yeah, I mean, just to go back what I said earlier, I do think there are going to be some people who will be fine having automated buying, but I think in general that's overhyped. I think especially older consumers are going to be pretty hesitant about that. So, yeah, that's, I think, the area for me that is the most overhyped.

[Karina Perkins]

I'm going to be a bit controversial here, and it's not because I don't think it's a brilliant thing. I just think that it's not happening yet. And that's seamless personalization. So that is possible. That is the great sort of future potential of AI. But at the moment, according to consumer surveys, we're still seeing that AI is guessing wrong or it's overselling or it's kind of bombarding users with ads that they don't want. There was one survey that found one in five consumers say that recommendations are still way off base. And so I think until that personalization is really honed and effective and accurate, I think that is a little bit hyped at the moment.

[Sarah Lebo]

I agree with both of you. I think it's an important time to remember that 80% of shopping still happens in store. So even what we're talking about right now, for the time being at least, is 20% of shopping, which is a huge amount. This is in the US which is a huge amount, but it's a fraction of shopping. And we're going to be talking about a fraction of that fraction.

[Yori Wormsler]

But you know what? Agentic AI is also going to have a big impact in store.

[Sarah Lebo]

Say more.

[Yori Wormsler]

And it can already do that. Just if, let's say you take ChatGPT, you take a picture of a shelf and a product on a shelf shelf, it can give you reviews, it can tell you the price that you can get elsewhere. So even in store, shopping can be changed pretty fundamentally through agents.

[Sarah Lebo]

I'm going to put that in the bucket of one thing retailers and brands aren't paying enough attention to with generative AI, which is what I was going to ask you next.

[Yori Wormsler]

Kreena, you had something to say, I think, on that one too.

[Karina Perkins]

Yeah, no, I was just going to say I totally agree with that. I think it's sort of potentially in store is really interesting and that kind of omnichannel piece. But again, I think it's convincing consumers to use the tool. So it's kind of changing that shopping habit. And that can be slow, but I think it will be quite transformative once it does start happening.

[Sarah Lebo]

I think something that is going to inhibit adoption is also the fragmentation in this process. So, yeah, if you have a chatbot through Amazon, then that can be integrated with Amazon products that can be integrated across like parts of the open web as well. But ultimately, like, you're limited to Amazon. We already have all of these walled gardens that we struggle to work in between. There's not really any reason an AI agent would change that. In fact, I think a lot of companies are going to be even more cautious about keeping their walled garden walled in.

[Karina Perkins]

Yeah, and I think that also speaks to a broader point about the need for better data infrastructure generally. You know, without really clean, structured product and customer data, genai agents going to fall flat. So I think that data readiness really needs to accelerate.

[Yori Wormsler]

I mean, one counter argument to that is if a general kind of a universal agent takes off something like a superpowered Siri, like a ChatGPT or a ChatGPT, that's actually the main interface you have with your phone that could break down some of those barriers in the walled gardens, because then it becomes the orchestrator. I mean, it will send you to the right walled garden for whatever that need is.

[Sarah Lebo]

Yeah, I mean, a fair criticism of what I'm saying here that a technologist would probably say is that I am not thinking big enough. I'm thinking small and I'm thinking current. On that note, what is one thing retailers and brands aren't paying enough attention to with regard to generative AI right now.

[Karina Perkins]

So I would say the post purchase experience. So as I said in my report, what I really found was there's been several studies that showing a bit of a gap between where retailers are focusing their attention on AI, which is the kind of top of the funnel, and where consumers really want that additional help and see the value in AI. So I think simplifying returns, offering smarter loyalty programs, tracking deliveries, and I really think the retailers that use AI to kind of fix some of those problems are going to be the winners.

[Yori Wormsler]

I'm going to go with the impact of generative search and these agentic tools. That's going to have a big impact first of all on some of the more the importance of things like reviews and price because they'll be ingested and synthesized by these generative search engines. So optimizing for search, paying attention to things like reviews and objective criteria, product specs I think are going to make a bigger difference than they currently do and kind of an extension of that, I think there's going to be a lot more.

[Sarah Lebo]

Price competition.

[Yori Wormsler]

Price competition?

[Sarah Lebo]

Yeah, yeah. I mean if you can pick out the cheapest high quality item, then that'll push the prices down. Theoretically.

[Karina Perkins]

Yeah. I think further to Yuri's point as well, brands need to be thinking about how they're optimizing their websites and their data so that it is optimized for these genai tools. You want to make sure that you're going to be discoverable in ChatGPT's shopping however you do that.

[Sarah Lebo]

I sound like such a luddite here, but if we have agents making shopping decisions on behalf of us on websites where agents are making merchandising decisions like what's the point? What are we up to? What am I doing?

[Yori Wormsler]

Yeah. I think if you focus on the parts of shopping you don't like, that's I think what will disappear most quickly because there's an obvious need. But if you're shopping for a car, you're right, you do want to spend the time to actually go through it, try different things, research deeper and deeper. So you'll still be doing stuff, but the stuff that you most want to do and theoretically you can get rid of the stuff. That's tedious.

[Sarah Lebo]

Yeah. Even like retail, I think a big part of shopping that people don't like is looking at their body in a mirror over and over again in different clothing. Can an AI agent help that? I don't know.

[Karina Perkins]

Not yet, but yeah, probably one day. Right? I mean we have ar, we have. There's kind of all those capabilities, when they come together, have the potential to completely transform the shopping experience.

[Yori Wormsler]

Yeah. These virtual try on tools are forms of generative AI.

[Sarah Lebo]

That's a fair point. Yeah.

[Yori Wormsler]

I mean it could. And as they get better and better, it definitely could reduce some of that.

[Sarah Lebo]

Yeah. Of course you'll have to have virtual try on tools that can report. This is like what you said with specs that can report accurately on size. We've talked before on this podcast about how it seems like sizing is a mess right now, measurements are a mess. That has to do with production quality. So. Yeah, and theoretically generative AI can fix that too. But we're talking about a massive system where everyone needs to be bought in and we're definitely not there yet.

[Karina Perkins]

No. And I think again this comes back to a broader point of it's very easy to get obsessed with the new shiny tool. And yes, we will have these AI agents that can automatically purchase something for somebody. But are consumers actually more concerned about the little frustrations in their day to day life with the shopping? Yes. I would recommend that people use technology first to address those frictions and make it as seamless as possible because that's what consumers face in their day to day life. And that's going to be the bigger result in the end, I think.

[Sarah Lebo]

Okay, so Karina's advice to retailers is focus on day to day frictions, make experience seamless for consumers.

[Karina Perkins]

Yeah, focus on the basics. Get the basics right and once you've got the basics right, then you can start looking at kind of wonderful, transformative new shopping experiences.

[Sarah Lebo]

That was Karina's one piece of advice. I think my advice right now as these kinds of search engines become more popular in shopping, is to pay really close attention to how people are talking about your brands across the Internet, in reviews, on social media, and honestly and particularly on Reddit, which is a place that these a lot of AI is scraping from and is a place where a lot of people talk about brands.

[Karina Perkins]

That's a great one.

[Yori Wormsler]

Yeah, no, that's excellent. You guys took the two best ones. I'm going to say just focus on first party data. I mean, this is just kind of an evergreen quote, but first party data is going to first of all help you design the products that you want. It's going to help you market better. It's probably going to help you, you know, without the first party data, your own internal gen and internal agent tools are going to work well and personalization is going to be much harder.

[Sarah Lebo]

Great. All right, well, that is all we have time for today. Thank you to our listeners and to our team that edits the podcast. They're always generating a great podcast. We'll be back next Wednesday with another episode of Reimagining Retail and Emarketer podcast. And on Friday, join Marcus for another episode of the behind the Numbers show, the Emarketer podcast made possible by Rokt.