Remember the days when artificial intelligence felt like a scene lifted straight from a science fiction film? For those immersed in the world of omnichannel retail, that imagined future has not only arrived, but it's also accelerating at an astonishing rate. Generative AI (Gen AI) is fundamentally changing how retailers interact with customers and manage their businesses operations.
The evidence is compelling. According to the 2025 OSF Omnichannel Retail Index (ORI), Gen AI adoption has more than doubled this year alone, surging to 24% from a mere 11% in 2024. Retail leaders aren't just contemplating Gen AI - nearly two-thirds (65%) are actively planning consumer-facing implementations within the next 6 to 12 months.
What this shows is a shift from testing to committing. Retailers are no longer just running pilots in isolated corners of the business. Gen AI is beginning to shape how customers discover products, how service teams resolve issues, and how marketing messages are tailored across channels. It’s moving from the innovation lab into the core of customer experience.
The Power Play: How Gen AI is Driving Impact Today (Top Use Cases)
The current sentiment is palpable: retailers are undoubtedly bullish about Gen AI. Nearly half (50%) view it as a strategic differentiator, with 23% of leadership actively championing its evaluation. Interestingly, customers are not just ready but eager: 71% express a desire for Gen AI to enhance their shopping experiences, and 58% are already turning to it over traditional search methods for product recommendations.
The bottom line is compelling: experts predict that Gen AI has the potential to unlock between $240 billion and $390 billion in economic value for retailers, which translates to a noteworthy increase in margins.
Let's explore the most impactful use cases:
- Hyper-Personalized Conversational Shopping Experiences
Imagine moving beyond generic recommendations to a truly personalized virtual shopping experience. AI chatbots will be able to grasp not only the context but also the individual's personality and immediate intent. For example, "Show me a chic, flowy dress for a beach wedding next month under $200 that works with sandals." The business impact is substantial: conversion rates skyrocket, average order values increase, and returns decrease due to better fit and preference matching. This is evident in "conversational search," as seen with examples like Bath&BodyWorks' scent finder or virtual assistants like Amazon's Rufus. Customer Service/Chat represents 30% of ORI Gen AI use cases.
- Automated & Dynamic Content Creation
Gen AI has evolved beyond simply generating product descriptions. Now, it's capable of crafting entire marketing campaigns, social media content, email marketing copy, and even ad creative – all with incredible speed and tailored precision. Consider FootLocker's use of AI to generate review summaries, which saves countless hours. The business impact includes faster campaign deployment, reduced content creation costs, consistent brand messaging, and improved SEO. Review Summaries account for 39% of ORI Gen AI use cases.
- Intelligent Internal Operations & Employee Empowerment (The "AI Copilot")
Not all applications of AI are customer-facing. Gen AI can serve as a "copilot" for your team. Imagine customer service agents equipped with an AI assistant that instantly retrieves relevant information from company policies, product FAQs, or customer interaction histories. Or consider AI tools that provide store managers with rapid insights into KPIs and suggest informed actions. The business impact involves reduced agent training time, faster issue resolution, improved operational efficiency, and smarter, data-driven decisions.
- Proceed with Caution: Addressing Gen AI's Controversies & Challenges
While the potential of Gen AI is immense, it's not without its challenges. Responsible adoption is paramount.
- The Dark Side of the Algorithm: Data privacy and security are primary concerns, with 60% of retailers expressing heightened worries. Algorithmic bias, where training data leads to skewed outputs, poses a significant risk. Gen AI's potential for "hallucinations" and toxicity must be managed carefully. Transparency and trust are also crucial, as many consumers are unaware when they're interacting with AI. High implementation costs, fragmented data sources, and a lack of internal expertise can hinder widespread adoption. Moreover, the human touch should not be overlooked, as excessive reliance on Gen AI may diminish the human connection in customer service.
The Unfolding Future: What's Next for Generative AI in Retail
Investment in Gen AI is not slowing down; 98% of retailers plan to increase their investments in the next 18 months.
Expect to see more multimodal AI capable of understanding and generating content across text, images, video, and audio, leading to more natural interactions. The rise of smaller, domain-specific AI models tailored for niche retail tasks will accompany general-purpose giants. Advancements in edge computing will enable real-time Gen AI applications. Gen AI will become an even more intuitive "copilot" for employees. Deeper integration with Augmented Reality (AR) and Virtual Reality (VR) will allow for immersive virtual try-ons and personalized virtual storefronts. Ethical AI by design will become increasingly important.
Don't Just Adopt, Accelerate Your Gen AI Journey
"Doubling Down on Gen AI" is not merely a suggestion; it is a strategic imperative for retail leadership. The competitive landscape demands not just adoption, but acceleration.
Prioritize data readiness, focusing on business and CX impact, invest in talent and strategic partnerships, and embrace responsible AI. The retailers who embrace Gen AI now will not just survive, but thrive, setting new benchmarks for the entire industry.
For deeper insights into omnichannel best practices and Gen AI adoption, explore the full 2025 OSF Omnichannel Retail Index.
Do you want to go further? Contact OSF’s Advisory team to identify your best use cases, roadmap, and success metrics.
