UK retail was in the spotlight this week as new data revealed retail spending growth more than doubled last month. This will be welcome news to retailers after a damp December, as it will for the government and wider economy, serving as another indicator of positive momentum in recent weeks.
While the GDP figures released yesterday showed a subdued end to 2025, green shoots are emerging for the year ahead as we close in on the all-important end to the financial year for many businesses.
Our latest UK Customer Satisfaction Index revealed almost half of consumers (43%) think their personal finances will be better in a year’s time, suggesting a stronger opportunity to spend (something I reflected on in this letter to the FT editor). For retailers especially, this should be seen as a real opportunity to capture spend as consumers become more confident.
A new storefront for online shopping
However, the retail sector is at an inflexion point. Customer expectations continue to rise while organisations try to move past a period of great uncertainty, adjust their offering to accommodate tighter margins, and evolve to meet the complex demands of today’s operating environment. These challenges persist across both the online and in-store experience.
The Financial Times recently presented another development, which they suggest puts the sector on the brink of further transformation: the introduction of automated shopping. While AI is already a familiar feature in retail, from self-checkouts to virtual try-ons, this latest approach gives us something else to reflect upon.
The idea is that chatbots, which can think and learn for themselves, would become the new shopfront for online shopping and further integrate the end-to-end experience, reducing or removing the need to scroll through Google, visit a website, select an item, or even give card and delivery details. I have talked before about every customer having its own AI agent that searches and finds our personalised solutions.
However, the reality is now with us and will impact many aspects of the online shopping ecosystem: media, advertising, financial infrastructure, data management and cross-selling. From a customer service perspective, while there are opportunities for retailers that embrace this transition, there are hazards, too.
Balancing efficiencies and personalisation with generating trust and loyalty
If automated shopping – or personalised shopping chatbots – become a new entry point to online retail, it may well meet the consumer demand for ease and efficiency. Its ability to adapt to personal preferences, coupled with the data they collect, might even allow for a more genuinely personalised experience than has previously been possible online.
But the organisation needs to ensure data is protected to the highest levels, as trust levels are critical to ensure the customer shares information appropriately.
Whether AI chatbots will make decisions in the customer’s best interests is a genuine issue, and there is a big difference between being personal and personalisation. We know that AI doesn’t have empathy or necessarily the same level of morality. We have seen a rise in issues where consumers become too reliant on AI chatbots for advice on very sensitive matters, and, as a result, potentially disastrous outcomes have followed. We need to keep reflecting on how we use AI as a force for good in this area.
Will human agents still be available and equipped to step in if something goes wrong? Will chatbots and AI assistants be able to foster genuine customer connections that lead to brand loyalty?
Technology can help to create a more seamless and personalised customer experience. But only if it is implemented with a clear purpose, balances convenience with accessibility and effectiveness, and is backed by a team of well-trained, empathetic customer service staff.
The businesses best placed to navigate this shift will already be finding answers to these questions. A new face of online retail doesn’t need to be a bad thing. But it must be achieved in a way that respects the customer first and foremost, valuing and promoting the trust, loyalty and connection that are so important for delivering excellent service.
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