New Ways of Shopping in the Evolving Retail Landscape
Last Thursday morning (afternoon for our European viewers!), I had the incredible opportunity to present at PnP Brand & Retail: Future of Commerce 2025. Unsurprisingly, AI was the word on everyone’s lips — from revolutionizing supply chains to redefining customer experiences and transforming sales, its potential to reshape the future of retail is undeniable.
The First Wave: E-Commerce Disruption
A decade ago, the first wave of disruption hit retail: e-commerce. With the development of the internet and platforms like Amazon and eBay, customers gained unprecedented control over where, when, and how they shopped, no longer being limited by physical location or store hours. Retailers with higher overhead costs were hit particularly hard. Unable to keep pace with the changing customer landscape, once-iconic brands like Sears and Toys “R” Us filed for bankruptcy.
What was the death of some became the life for others. While traditional companies faltered, forward-thinking companies like Walmart, Nike, and Apple invested heavily in omnichannel strategies. By integrating in-store and online experiences, they adapted and met customers where they already were, creating then, the future of retail. But this is already in the past.
Now, as we stand on the shoreline of the second AI wave, retailers need to ride the tide together, to not only survive but thrive (the rhyming was an accident, I promise.)
Ride the Wave of Consumer Trends — Or be Crushed by It
Once again, consumer trends are at the heart of this second wave of change. And our rapid acclimation to conversational search engines is the cause. From ChatGPT to Gemini, AI is redefining how customers shop and interact with brands.Today’s consumers don’t just want personalized experiences—they expect proactive and individualized conversations that are intuitive, seamless, and uniquely tailored to their needs.
From Reactive to Proactive
Chatbots are cavemen. They dumbly “listen” to customer questions only to spit out a list of pre-programmed answers—none of which ever seem to be what you’re actually looking for. As simple, rule-based mechanisms, chatbots aren’t designed to truly listen, understand, or engage with customers on a meaningful level.
Enter AI agents. These advanced tools don’t just wait for customers to come to them—they proactively reach out, anticipate needs, and create a sense of genuine care. Imagine a shopping experience where your brand doesn’t just respond but understands.
From Personalization to Individualization
Personalization has been a buzzword in retail for years, but AI takes it to a whole new level. Instead of using cookies to create targeted ads for groups of people (personalization), AI’s “memory” enables individualization. For the first time, customers can ask questions to AI agents and receive individual product recommendations from a massive inventory. This democratizes the kind of VIP shopping experiences that were once reserved for in-store elites.
But it’s not just about the technology—it’s about the experience. Consumers are now engaging with AI in ways that feel reciprocal, just like texting a friend. In one part of our consumer research (our subjects were Gen Z women across the East and West coasts), we saw them fascinating: they were polite to AI. This reflects both how natural the conversations felt and the generous reciprocity of consumers when they genuinely enjoy their shopping experience (Now imagine feeling propelled to be polite to a chatbot).
Retail’s Second Shift: Social and Conversational Commerce
The second major shift is the rise of social commerce. Social media channels like Instagram and TikTok are no longer just for sharing photos and videos—they’re where product discovery happens. Customers are increasingly comfortable shopping directly on these platforms, and retailers need to meet them where they are.
More and more companies have recognized this trend and started investing in human social media managers to respond to customer questions across these channels. However, no matter how chronically online someone is, they can’t be online 24/7 to answer DMs. No matter how great a salesman they are, they can’t guarantee consistent company branding across every interaction. And even if they’re the nicest person in the world, they’re still human—they have bad days, and yes, they might even get cranky towards particularly difficult customers.
Enter the AI Sales Agent:
AI sales agents are designed to capture the best qualities of human salespeople while offering scalability and always-on availability. For example, take what we’ve coined “the Palona Experience,” where Palona’s AI sales agents guide and delight customers every step of the shopping experience:
- Slide into their DMs: Our agents start the conversation on social media, where customers are most comfortable.
- Suggest their Perfect Product: Our agents retain memories of past customer interactions to offer their perfectly individualized recommendations.
- Seal the Deal… for Life: Our agents are gently persuasive, guiding customers toward a purchase in a way that feels natural, and never feels sales-y.
What sets these AI agents apart is their ability to learn, scale, and refine in real-time. Every customer interaction becomes training data for them to continuously improve. And we’ve seen that this model works.
Setting Sail: AI Myths, Roadblocks, and the Right Partners
Even though AI is the word on everyone’s lips, with new developments emerging almost daily — it’s still a challenge for businesses to accept, use, and eventually embrace it. There are many myths and several mental and psychological roadblocks one must overcome along the way.
One such extreme myth that I’ve heard (maybe due to the likes of Black Mirror) is “Will AI kill us?” To which I say, “If it comes to that, just unplug the computer.”
And let’s not beat a dead horse, but AI isn’t here to replace our jobs. Just like the advent of the internet, AI is a tool that, when used correctly, will reduce friction in the customer experience and free up time and human resources. It’s a win-win for everyone.
Here’s the reality: There is no other option. Competitors will eat retailers alive if they don’t adapt. History will repeat itself.
But, not all companies claiming to be AI-driven are created equal. Many “AI” companies are simply riding the hype wave without the technical expertise to back it up. When selecting an AI partner, it’s crucial to choose a true AI-first company, one that wouldn’t exist without its AI capabilities.
For businesses figuring out how to adopt AI, the most important thing is change management. AI is just a tool for your company to use, the most important issue is still about preparing your team, processes, and culture to maximize its utility.
AI isn’t the future of commerce — it’s the present.
The second wave of retail transformation is already here, and it’s powered by AI. Under all the buzzwords, jargon, and abbreviations, the heart of every company remains the same: delighting your customers and making them fall for your brand.