Retail Titans Navigate AI Shopping Wave, Prioritizing Brand Control and Multi-Vendor Strategies

The increasing prominence of artificial intelligence in shaping consumer purchasing decisions presents a significant challenge for retailers. As customers gravitate towards chatbots and automated assistants for product discovery, businesses risk losing direct influence over how their merchandise is presented, sold, and bundled.

This strategic concern is compelling major retail chains to invest in developing or supporting their own AI-powered shopping tools. The aim is not merely technological adoption but to maintain close customer relationships as buying decisions become increasingly automated.

Retailers Prioritize Brand Control with Hybrid AI

Several prominent retailers, including Lowe’s, Kroger, and Papa Johns, are actively experimenting with AI agents designed to assist shoppers with product searches, support inquiries, and order placements. Many of these initiatives leverage tools from Google, which provides retailers with the flexibility to integrate agents directly into their existing apps and websites, thus keeping customers within their branded digital environments.

For grocery leader Kroger, the pressing question is the pace at which AI will transform shopping. The company is piloting an in-app AI agent that can compare items, facilitate purchases, and personalize suggestions based on customer habits, needs, and data like price sensitivity and brand preferences. This deliberate strategy aims to keep these critical decision-making processes within Kroger’s proprietary systems, rather than ceding them to external platforms.

This approach reflects a broader tension in retail. While making products available through large, third-party AI chatbots, such as those from OpenAI or Microsoft, can expand reach, it also carries risks. These include potentially diluting customer loyalty, reducing opportunities for add-on sales, and impacting advertising revenue. When a third party controls the interface, retailers have diminished influence over product presentation.

Lauren Wiener, a global leader at Boston Consulting Group, notes this shift: "There’s a clear market movement with retailers investing in their own capabilities rather than solely relying on third-parties."

Multi-Vendor Strategies Mitigate Risk

Building and maintaining these advanced AI systems is complex, especially given the rapid evolution of underlying models. This dynamic environment influences how retailers approach vendor relationships.

At Lowe’s, Google’s shopping agent powers its virtual assistant, Mylow, which has reportedly led to more than double the conversion rates for online users. However, Lowe's avoids sole reliance on a single provider. Seemantini Godbole, Lowe’s chief digital and information officer, explains the need for diversification: "The tech we build can become outdated in two weeks." This rapid change necessitates working with multiple vendors, including OpenAI, to avoid dependency on one system.

Kroger adopts a similar strategy, collaborating with companies like Instacart alongside Google to support its AI agent initiatives. Yael Cosset, Kroger’s chief digital officer, emphasizes, "AI agents are not just top of mind; it's a priority for us, advancing at a remarkable pace."

Pragmatic Adoption and Future Prospects

For some, the challenge lies in deciding the extent of internal AI development. Papa Johns, for instance, focuses on utilizing existing solutions rather than building proprietary AI models. The company is testing Google’s food ordering agent to manage tasks like estimating pizza quantities from customer-uploaded photos, accessible via phone, website, or app.

Kevin Vasconi, Papa Johns’ chief digital and technology officer, clarified his strategy: "My goal is to be an AI expert in terms of using the agents, not in building them." This pragmatic focus on application over ownership acknowledges that while agent-based shopping is gaining traction, it is not yet the primary method for everyday purchases.

Ed Anderson, a tech analyst at Gartner, views Google’s tools as lowering the barrier for entry for retailers. "The real challenge here is application of the technologies," Anderson noted, suggesting these solutions enable retailers to advance without starting from scratch.

Currently, retailers are navigating this landscape through cautious experimentation, diversified vendor partnerships, and provisional commitments. Detailed results from trials by Kroger, Lowe’s, and Papa Johns remain undisclosed. This reserved stance indicates that businesses are still assessing the optimal balance of control to retain versus concede as the retail world incrementally shifts towards automation.