Across global markets, AI is quietly reshaping retail. From behind-the-scenes supply chains to front-end customer journeys. The global AI-in-retail market reached approximately USD 11.8 billion in 2024, signaling rapid adoption fueled by value in forecasting, personalization and operational optimization.

A staggering 80% of retail executives report intent to adopt AI automation by the end of 2025. Major players like Target and Walmart are already utilizing AI-driven inventory systems. According to a 3 June 2025 Business Insider report, Target’s “Inventory Ledger” forecasts stock-outs before they occur, doubling its coverage over two years and significantly reducing missed sales opportunities. Walmart tailors its inventory to regional demand using AI insights, shifting pool toys to warmer climates and seater to cooler ones. These real-world examples highlight how AI leads to dynamic, location-specific stocking and less overstock/understock situations.

Advancements in AI cameras, electronic shelf labels and cashier-less experiences are enhancing in-store intelligence. At CES 2025, SOLUM showed how vision-AI integrate ESLs delivered targeted promotions, yielding a 7% increase in conversion rates in convenience stores. According to the Guardian, UK retailers such as Currys and Tesco are deploying AI cameras to monitor inventory and shopper behavior. They have also added robot packers to complement these cameras in order to handle stock more efficiently, thus cutting labor costs while improving service.

Personalization now drives revenue as AI engines are helping retailers customize offers based on history, preferences and behavior. Gartner and Salesforce stats show 70% of consumers expect AI-enhanced personalization with 63% of them likelier to buy when such experiences are offered. Meanwhile, generative AI tools like chatbots and virtual assistants support automated yet adaptive customer interactions and engagements. In ecommerce, personalized content and chat experiences are leading to double digit uplift in sales conversions.

A major concern regarding AI is that it will replace retails jobs. It won’t. The truth is it will transform them.  Reports show that 65% of retail jobs could be significantly automated by 2025, yet many roles shift toward oversight, experience design and AI governance. In stores and warehouses alike, AI augments human work. Computer vision tools help staff manage shelves and prevent shrinkages. Robots support pick-and-pack operations while chatbots handle routine queries. Collectively, these systems serve to boost efficiency without erasing human agency.

AI in retail raises significant ethical considerations. A study on Ethical AI in Retail: Consumer Privacy and Fairness by Anthonette Adanyin reveals widespread consumer concerns about data usage and algorithm biases. Key recommendations include transparent AI systems, regular audits, customer feedback loops and fairness protocols to prevent disproportionate treatment, something that is essential in an industry that is so trust-sensitive. Retailers who fail to address these risks may face reputational damage or regulatory pressure, particularly as global scrutiny around AI ethics intensifies.

Malaysia, with high smartphone use and rising digital readiness, stands to benefit from AI in retail but structured support is key. A coordinated effort involving retailers, tech firms, and industry bodies could accelerate adoption, from intelligent shelf systems to regional forecasting. Ongoing investment in digital infrastructure and training will be critical to ensure that small and mid-sized enterprises are not left behind in this transformation. With the right policies and pilot frameworks, Malaysia could position itself as a Southeast Asian testbed for ethical, scalable retail AI solutions.

Retailers embracing AI must also plan for continuous evolution. As consumer behaviors shift and technology advances, AI models require regular tuning and retraining to stay relevant and accurate. This includes adapting to new shopping patterns, emerging product categories, and unexpected events like supply chain disruptions or inflation spikes. Retail success with AI will hinge not only on deployment but on agility, being able to learn, iterate, and refine in real time. Companies that treat AI as a living system, not a one-time tool, will be best positioned to capture long-term value across physical stores and digital platforms alike.