AI in Aisle 5: How Retailers Are Using AI — and What Shoppers Really Think
As of November 2024, over 60% of major retailers are integrating AI into their operations.
It’s proven that artificial intelligence can improve back-end retail operations, like visual merchandising and store planning. (One Door’s Image IQ is a textbook example.)
AI can also optimize the in-store experience for shoppers, but are consumers truly ready to embrace AI when they encounter it in stores?
Not Just for E-Commerce: AI in Brick-and-Mortar Stores
AI is most closely associated with generative AI, like chatbots, and is widely used in e-commerce.
However, a significant portion of shoppers have likely encountered AI in stores without realizing it.
Dynamic Advertising & Promotional Displays
Tied closely to the rise of retail media, which is transforming how promotional content is delivered within physical retail environments, dynamic, data-driven signage and displays enable a programmatic approach to in-store merchandising.
By leveraging AI and machine learning (ML), retailers can tap into real-time data to serve highly relevant, personalized content on digital screens throughout the store.
These intelligent displays adjust automatically based on multiple factors:
- Inventory levels: If a product is out of stock, the display instantly pivots to promote an available alternative.
- Environmental prompts: A quick-service restaurant might promote hot coffee during a chilly morning, then switch to iced beverages as temperatures rise throughout the day.
- Customer preferences: Using loyalty program data, a grocery store can highlight plant-based items to shoppers who consistently buy vegan products.
This integration of AI with visual merchandising ensures timely promotional content that’s optimized for engagement and sales conversion.
Retailers benefit from more efficient ad spend, while shoppers experience tailored, helpful content that feels natural within their in-store journey.
Dynamic displays are an example of seamlessly blending AI with visual merchandising. They create a responsive environment that subtly enhances the shopping experience, often without shoppers realizing the sophisticated technology behind it.
3D Holograms
The future of visual merchandising is materializing — quite literally — in the form of holograms, bringing a new level of immersion to in-store shopping.
Unlike traditional 3D displays, holographic technology doesn’t require special glasses, making it easy for shoppers to engage with lifelike, three-dimensional visuals.
Retailers are using holography to reimagine how products are showcased and how customers engage with them. Holographic displays, powered by AI, offer a new dimension of interactivity that elevates visual merchandising.
Mid-market retailer H&M, for instance, allows customers to scan a QR code, choose a virtual model that reflects their body type and skin tone, and see how different outfits look before trying them on.
By blending digital and physical elements, holographic displays create engaging, personalized experiences that help shoppers visualize products more clearly and make more confident purchasing decisions.
Store Navigation
One of the earliest widespread uses of AI and augmented reality (AR) focused on improving in-store wayfinding, making large, complex retail spaces easier to navigate.
It’s common for customers to use a store’s mobile app to access interactive maps. These maps have step-by-step directions or digital arrows guiding shoppers to specific product locations.
Now, AI-powered AR is advancing even further, enabling store navigation down to the precise shelf or display.
These systems can highlight exact product placements within aisles, dramatically reducing search times and improving the overall shopping experience.
In addition to wayfinding, AI can provide real-time stock visibility, showing shoppers whether items are available, low in stock, or carried at nearby locations.
This helps manage shopper expectations and reduce frustration.
Final Thoughts
These technological innovations illustrate how AI-driven store planning and merchandising can enhance efficiency and convenience.
Yet as helpful as these tools may be, retailers must still balance technical capability with consumer comfort.
The Customer Perspective
Retailers are investing in AI solutions, but how do consumers — those who will directly experience its effects — feel about AI in stores?
New data from payment company Klarna suggests that the new generation of dominant shoppers (Gen Z and Millennials) is ready for tech innovation, but only to enhance — not to make purchasing decisions.
For example, surveyed shoppers said they want to use virtual technology, AR, and AI to find the best products for them.
Almost 60% of shoppers are open to the idea of a robot approaching them in-store for product recommendations and shopping assistance.
However, shoppers want only help from AI. They don’t want AI making any permanent purchasing decisions for them.
A recent survey from e-marketing agency Omnisend “found that 66% of consumers would refuse to let AI make purchases on their behalf even if they get a better deal.”
This highlights the vast difference between letting AI offer personalized recommendations versus handing over total purchasing control.
Why are consumers hesitant to let AI help but not too much? It boils down to:
- True intent. While consumers recognize (and sometimes appreciate) that AI is helpful, many shoppers fear that AI serves the retailer’s bottom line more than the customers’ needs.
- Privacy concerns. According to Omnisend’s survey, “58% of consumers say they are worried about how AI handles their personal data. Transparency remains a major issue.”
- Mistrust in capabilities. Consumers aren’t yet convinced that AI is “smart enough” to handle much of the in-store shopping experience.
How Retailers Can Respond – and Move Forward with AI
Where does this leave retailers pushing ahead with AI investments?
The path forward is clear, but customer experience must remain the priority.
Integrating artificial intelligence into shopper-focused strategies is essential for retail growth. To stay competitive, retailers must embrace innovation and continuously evolve with this technology.
Yet, fundamental to merchandising is one core principle: delivering a frictionless, engaging customer experience.
AI should be used to enhance existing shopping habits, not compete with them.
Many customers are satisfied with their current shopping methods. Retailers must understand that if they use AI/ML/AR, these technologies are meant to aid the existing shopping experience, not overshadow it.
Retailers need to be transparent about how they use AI.
To build trust with customers, retailers need to prioritize transparency about data usage and offer granular control over personal information. AI integration should have a dual focus on providing genuine benefits to shoppers and increasing sales.
AI should feel intuitive, not invasive.
Customizing the shopper experience is fundamental to brand loyalty, and consumers consistently report “personalization” as a necessary part of shopping.
However, AI walks a fine line in the social perspective between creepiness and convenience.
Giving shoppers control over how and when they receive product recommendations, deals, and notifications can reduce the intrusive feeling.
This can prevent consumers from being pushed away by excessive retargeting, particularly with in-store retail media and ads.
Conclusion
Learn from the world’s top retailers, like Kroger, AT&T, Lowe’s, Starbucks, Sephora, Adidas, and CVS, about the latest trends in visual merchandising and AI:
Download 2025 Visual Merchandising and AI Predictions, According to the Retail Industry’s Top Innovators.