As artificial intelligence (AI) continues to evolve, its influence on the retail sector is profound, albeit often unnoticed by consumers. The most significant changes are occurring behind the scenes, affecting critical decision-making processes such as product visibility in search results, inventory management within supply chains, code deployment by engineers, and real-time responses to customer behaviors. For legacy retailers facing an increasingly fragmented and competitive landscape, adopting AI is becoming a foundational aspect of their operational strategy.
Macy’s exemplifies this shift with its ‘AI-first’ approach, articulated by senior director of engineering, Murali Murugan. Rather than simply layering AI on top of existing workflows, Macy’s is restructuring its decision-making processes to enhance efficiency and create inherently relevant customer experiences. This strategy is indicative of a broader trend in retail, where businesses are moving away from isolated AI initiatives towards integrated systems that minimize the gap between data insights and actionable outcomes. Initial efforts have concentrated on high-impact applications like personalized search recommendations and enhanced customer engagement, which have led to measurable improvements in conversion rates. As Murugan notes, establishing early successes has shifted the conversation from technological feasibility to strategic scalability.
The integration of AI extends into conversational commerce through innovations such as Ask Macy’s, an AI-driven shopping assistant that functions like a personal stylist rather than a conventional search tool. Customers can communicate their needs conversationally, receiving tailored recommendations based on previous purchases and preferences. Importantly, Macy’s envisions AI as an invisible enhancement to human decision-making rather than a replacement. The overarching goal is to create a retail environment that feels increasingly seamless and personalized, powered by sophisticated systems operating beneath the surface. Murugan emphasizes that true transformation arises from a commitment to continuous improvement, learning from past experiences, and adapting swiftly to new technological standards, ultimately leading to a significantly enhanced customer experience.
Source: Repositioning retail for the AI era via MIT Technology Review