Our observation is that the over 1000 one-off solutions at the show confuse more than provide clarity on how to integrate so many systems and solutions into an integrated whole. The AI hype was unavoidable, but the how-to was convoluted at best.

The acres of AI-infused technology displayed on the expo floor won’t result in any significant breakthroughs when deployed in a vacuum. The value will be realized when AI applications adapt and evolve to work together as a holistic connected system.

There is a game show that rises from the ashes every decade or so, the Supermarket Challenge. In the game, there is a frenzied race where contestants fly through grocery aisles for one or two minutes tossing as many of the priciest items they can find into a shopping cart. The winner is the one with the most valuable cart and takes home the groceries and other prizes. If you are a retailer, strategist, or analyst hoping that attendance at the NRF Big Show 2025 would reward you with some clarity in a moment of AI disruption, it is unlikely that you took home the prize you hoped for. You ran around and tossed lots of Retail AI trends-related thoughts into your head, but likely left with an empty shopping cart, more confused than when you arrived.

Finding Clarity

We are applying our best sensemaking practices to unpack the clutter that often accompanies such a huge retail tech show and deconstruct the emerging future of a technology and increasingly AI-powered retail industry. But first, we’ll cut to the chase. We are witnessing Retail’s AI’s evolution, not Retail’s AI’s revolution. We believe that retail has entered the AI-augmented era.

Want proof? Nvidia, known as the industry leader in developing advanced AI chips and software, had a large presence at NRF (while not participating as a sponsor). The Vice-President and General Manager of Retail and CPG, Azita Martin was on the stage alongside Walmart’s CEO John Furner, and we counted at least 34 Nvidia employees at the show, many of whom spoke on panels. The large footprint of a software developer which is neither a retailer nor a paying sponsor says something significant. It confirms our thesis, we have entered the AI Era of Retail.

That said, the acres of AI-infused technology displayed on the expo floor won’t result in any significant breakthroughs when deployed in a vacuum. The value will be realized when AI applications adapt and evolve to work together as a holistic connected system.

Our observation is that the over 1000 one-off solutions at the show confuse more than provide clarity on how to integrate so many systems and solutions into an integrated whole. The AI hype was unavoidable, but the how-to was convoluted at best. And there is still a group of innovators with solutions looking for a problem. We see a lot of activity, but much of it is not relevant to today’s problems. To be fair, with any systemic change, you must zoom out to see the delta between what was, what is, and what may come next to develop a successful strategy. But woe to the smaller retailer looking for an AI strategy on the expo floor.

Clearly, the behemoths with deep pockets — Amazon, Walmart, Alibaba, and other large retailers — are working on unified systems that exploit the promise of artificial intelligence. But the long tail of retail is literally a very long tail. We caution them to avoid rushing to fill their proverbial shopping carts with over-hyped solutions to compete. In an era of rapid change, we suggest that they look for a holistic approach that blends novel technology with existing systems and to avoid a one-size-fits-all solution that is only targeted at the issues of today. The better approach is to find tech partners who are smart and adaptable enough to anticipate and solve for the future of retail.

Asking the Right Questions

Our consequential takeaway is to ask retailers if they are asking the right questions about their tech future. To put it simply, how is AI making a quantifiable difference in:

• Sourcing, supply chains, and operational efficiencies
• Forecasting and inventory management
• Security, cybertheft, and crime
• Physical and ecommerce integration
• Customer service and experience
• Saving the company money
• Playing a role in sustainability and circularity efforts
• Enhancing the human factor

Finding the Right Answers

We found most of the answers to these questions hidden in plain sight at the show. Let’s touch on each one from a macro perspective. 

1. Sourcing, supply chains, and operational efficiencies

The AI advantage lies in combining established, lower-priced technologies that are super-charged by AI. Existing solutions to digital product passport and textile label transparency legislation served as a catalyst for industry transformation. We now have widespread adoption of RFID chips and Bluetooth technology documenting place of origin, product attributes, and environmental impact, among other data, The data collected and transmitted through RFID are now training intelligent models to optimize supply chains, forecasts, logistics, and respond to weather and shipping disruptions. Intelligent tracking also facilitates accurate pre-selling of products and restocked items.

Another example of AI layered over existing technology can be found in AI-3D digital twin assets. We wrote about Walmart’s deployment of digital twin technology in 2023. When fused with AI, the existing systems use the digital twins to anticipate and identify problematic patterns, anomalies, and errors to obviate failures before they occur.

2. Forecasting and inventory management

The changes in demand forecasting and inventory management software are iterative. Pioneers like Celect, purchased by NIKE in 2019, blazed trails in product distribution, inventory visibility, logistics, and demand prediction efficiency. As the technology continues to mature, the bar is raised higher. Invent.AI founder and CEO, Professor Gurhan Kok, explained why demand forecasting is only getting “better, smarter, and more accurate.” 

As large language models train on more varied data, weather, local events, social trends, economic factors, etc. the information that can be applied to forecasting models is increasingly granular. According to Kok, forecasting technology has advanced enough to inform buying decisions “a year out.” A point he stressed more than once is that AI is now paying for itself with increased efficacy.

3. Security, cyber theft, and crime

AI is on watch 24/7. It patrols the internal platforms of leading retailers and brands searching for unusual patterns in gift card activity, sales behavior, privacy breaches, and inventory. Diane Brown, VP of IT Risk Management at Ulta Beauty described a preemptive defense enacted by the company after Ulta’s security partner Cequence Security identified a threatening inventory breach of physical store data in the United States. An unauthorized user was searching for the exact number of Dyson hairdryers available in each store. Before stores opened the next day, managers secured the inventory in stores and the company averted a targeted attack. Additionally, Brown explained that at the first sign of a breach, Ulta locks all accounts and sends an automated password reset to all registered users.

Chris Lanzilotta, Chief Information and Security Officer for Home Depot mentioned that Home Depot is using AI to search for deepfakes of executives and fake marketing initiatives. The AI is constantly on guard protecting the company against deceptive technology in the hands of threat actors. It is also deployed against identity violations ensuring that the company knows who is on the other end of each transaction.

4. Physical and ecommerce integration

As with supply chains, AI is combining with RFID technology increasingly for in-store data collection and computer vision as customers shop in retail spaces. Mapping the holistic customer journey is now attainable as retailers leverage online and in-store data to bridge the gaps. Ellen Svanström, Chief Digital Officer at H&M explained, “We are connecting the physical elements with the digital ambient technology. RFID now connects with smarter AI applications. In a physical-digital retail world, it can connect the dots. We are leveraging low-cost technology with AI…this is a game-changer for us.”

Bryce Boothby, Global Director of Product at McDonald’s Corp. discussed the impact of computer vision fused with AI to influence store design and customer flow. Trang To, VP, Omni, at Tapestry mentioned, “Computer vision merged with machine learning can tell us who is coming in, who is engaging, and how. This impacts store design, merchandising, and associate training.”

5. Customer service and experience

Enter agentic AI into the conversation. Agentic AI at its core is a genuinely smart assistant that can make decisions, solve problems, and perform tasks on its own, without needing constant human guidance. In a retail context, agentic AI often takes the form of a chatbot. At the recent Consumer Electronics show, Nvidia CEO Jensen Hwang demonstrated (among other things) a suite of agentic AI “containers” as he called them. Each container deploys a tailored collection of AI capabilities suited for different tasks. The customer service container integrates into a retailer’s existing CRM system to analyze inventory, product details, customer data, and service scripts. They then generate real-time solutions within prescribed parameters and human-like chat responses.

Another Nvidia “container” is oriented toward product awareness and consideration. This container can be integrated into a retailer’s Product Management System to create product catalogs, write product descriptions, optimize for SEO, identify market gaps, and generate marketing materials while customizing many of the elements to improve the shopping experience for individual consumers. It was no accident Nvidia was on-site at NRF.

6. Saving the company money

This answer is ambiguous: It depends. AI applications are varied and complicated. They include:

• Automated Code Generation: AI can generate code, speeding up ecommerce and internal development
• Inventory Management: Scanning for redundancies and missed signals while examining historical sales data, price, weather patterns, and increasingly granular data to distribute the right product, to the right store, and at the right price reducing markdowns and increasing profitability.
• Supply Chain Optimization: Combining low-cost technologies such as RFID and AI to increase transparency, search for anomalies, and refine forecasts.
• Personalized Marketing: AI-powered analysis supports hyper-personalization at scale as focused targeting supplants segmentation. Marketing costs decrease as AI-generated content is tailored to individual customers.
• Energy Management: Schneider Electric, a Fortune 500 multinational company had a presence at NRF promoting AI-optimized energy efficiency systems for stores and warehouses to reduce climate impacts and reduce utility costs.
• Price Optimization: AI can analyze market trends and competitor pricing to optimize pricing strategies.
• AI Negotiation: AI can be trained on negotiation parameters and legal structures automating dealmaking between retailers, their suppliers, and customers.
• Weather Impact Prediction: AI’s superior weather predictions are deployed to anticipate weather’s impact on sales, profitability, merchandising, and demand to harness hidden opportunities in increasingly frequent extreme weather events.

7. Playing a role in sustainability and circularity efforts

AI isn’t making a dent, yet. Any sustainability gains achieved by increased inventory efficiency and reduced garment waste are dwarfed by the increased energy demands that power artificial intelligence. As cleaner energy sources come online, the benefits of AI efficiency will outweigh the costs, but currently, AI’s impact on the environment is a net negative.

8. The human factor

Apparently, tech innovators have forgotten the human factor – the people that retail relies on to thrive. There are plenty of workforce efficiency tools, but nothing that fundamentally transforms the quality of the workforce’s lives.

Distilling Results

After cutting through the clutter, our best conclusion is the state of retail’s AI evolution is that it’s a work in progress. The number of tech solutions at NRF reflects the fact that

there are too many solutions hoping to gain traction, the majority competing among themselves. Too much energy is wasted on disjointed AI implementations; retailers need guidance on how the right systems fit into an integrated whole. There is too much emphasis on retailer optimization versus attracting and pleasing consumers; the tech community seems to be in love with its engineering innovations losing sight of the ultimate arbiter, the customer. 

There is little apparent concern for elevating the experience of the people who work in retail. They are the brand ambassadors and can make or break customer loyalty. What happened to AI augmenting the workforce as a partner? There needs to be a more robust conversation about reskilling and how AI, particularly GenAI, is going to transform human work. Yes, there are innovators working on workforce efficiencies, but there are few discussions about strategies to integrate AI agents into a human workforce. It’s a missed opportunity; retail is a business that serves people based on relationship and trust and that may be lost to the forces of optimization.

As we adapt to Retail’s AI’s evolution, we need to pause and recalibrate. While there are transformative opportunities to reshape retail for the better, we should never forget the very human appetite for surprise, whimsey, and awe, qualities that machine learning is not yet capable of appreciating or stimulating. Remember Newton’s Third Law of Motion Physics, “For every action, there is an equal and opposite reaction.” As C-Suite attention shifts to AI, don’t be surprised if our key constituent, the customer, has other ideas choosing to spend dollars with retailers who offer a human perspective on the retail experience; one that is holistic, empathetic, engenders trust and is relatable. All the genius of AI tech needs to balance science with art, as clichéd as that may sound. Our advice? Don’t forget who’s paying your bills.