AI is transforming the retail industry but can offer many benefits for small businesses
From changing the way customers search for products to sparking debates on the growing use of AI in high-profile advertising campaigns, the impact of AI on the retail industry is evident.
While the pace of change may seem daunting for small retail businesses that lack the large budgets of their corporate counterparts, there is a real opportunity for these businesses to leverage AI to save money and time, maximize the potential of their teams, and market to today’s consumers in powerful ways.
What types of tasks should retailers be looking to improve with AI? According to Arnaud Gallet, director of the National Retail Federation’s Retail’s Big Show Europe, the key to leveraging AI in small businesses without huge budgets is focusing on “low-barrier, high-impact use cases that improve efficiency and customer experience.”
AI personalization at scale
AI personalization at scale is a perfect example of this type of use case. “What used to require a dedicated team to pull customer data, build manual segments, and write dozens of message variants can now be done by one person in a few clicks”, explains Adil Wali, chief product officer of marketing automation company Klaviyo.
The use of AI can help create “smarter, more granular segments based on behavior.” The benefits of this approach are clear, with improved conversion rates and higher customer satisfaction compared to more traditional methods of blanket messaging to an entire email list, regardless of current and past behaviour. As Wali puts it, “it’s not just about efficiency, it’s about unlocking the kind of marketing that builds lasting relationships”.
For small businesses, this is “levelling the playing field…surfacing insights that were previously hidden in data”. It’s not replacing teams of people; it’s adding capabilities that were previously out of reach for small businesses. Teams can respond in real-time, providing customers with a more personalized experience that feels premium.
AI to improve the efficiency of repetitive tasks
The most significant opportunity for small businesses lies in streamlining or enhancing some of the most basic and repetitive tasks while improving the overall customer experience.
“Practical starting points include using AI to generate or refine product descriptions with tools like ChatGPT, Jasper, or Shopify Magic, improving SEO and saving time,” shares Gallet.
Gallet goes on to highlight that everything from FAQs and basic support tasks can be outsourced to “AI chatbots”. In contrast, “dynamic FAQs and help articles can be maintained with platforms like Notion AI,” and “AI-powered apps on tablets or smartphones for instant access to product info and stock levels” can empower store staff.
While these may not be the most revolutionary uses for AI, they offer the benefits of being practical, easy to implement, and straightforward to measure in terms of improved efficiency.
As Gallet explains, “The common thread isn’t flashy tech—it’s smart, customer-first applications of AI that respect the brand’s voice and the customer’s trust.”
AI and declarative commerce
Software company Shopify is looking beyond improving the efficiency of repetitive tasks and is experimenting with “declarative commerce”.
Deann Evans, Shopify’s managing director for EMEA explains declarative commerce as “rather than instructing software on what to do – such as setting up a campaign or editing a storefront”, instead allowing business owners to “express what they want to achieve – such as creating a campaign to attract new customers – and letting the technology take care of the execution.”
This shift, moving from “commands to intent”, lies behind Shopify’s new Horizon theme, which allows users to “just describe your vision, and AI creates the design”.
“This new approach, where platforms respond to business goals, not just manual tasks, could become the next great inflection point in retail strategy, “ states Evans. It is also a perfect example of how AI can make life easier for time-poor small business owners who want the result without having to work through the technical details.
AI in retail – transparency builds trust
While AI offers significant advances for small businesses and enormous opportunities for improving efficiency, there are key considerations that need to be taken into account to incorporate AI in a way that avoids “compromising customer trust or weakening brand image,” according to Gallet.
“This involves using clear editorial guidelines to ensure that AI-generated content stays true to the brand’s universe,” he elaborates.
Another key consideration? Transparency. “Customers should be informed when AI is used, especially in automated customer service or personalized campaigns”.
Big retailers are already navigating this and can serve as inspiration. Gallet highlights online retailer Zalando, which “uses AI to solve real customer pain points, like size and fit, while being transparent about when and how AI is involved—proving that clarity builds trust.”
AI in retail – the road ahead
While small businesses must navigate the potential pitfalls of AI, by taking actions such as having clear policies in place to collect and use data correctly, there is a massive opportunity for AI to make them more efficient and profitable.
AI offers “the capabilities to boost loyalty, streamline discovery and create seamless onsite experiences, without the need for vast technical budgets and expertise,” as Evans puts it.
And with declarative commerce becoming a reality, she goes on to envision a future “where merchants simply express their goals and watch as their tools and systems orchestrate the necessary changes across their entire business….It’s retail, re-imagined.”
