Generative Artificial Intelligence (GenAI) is driving a personalisation revolution in retail. But it’s not the kind of personalisation the industry has been discussing over the last decade.
Previously, the focus has been on using customer demographics and historic purchasing data to tailor the shopping experience, with real-time recommendation engines creating highly curated product promotions.
But GenAI is now allowing customers themselves to reveal their shopping intent organically, in real-time, and personalise their own journey as they go. Retailers won’t simply be guessing based on customer data. Instead, they’ll be conversing with customers in real-time.
Our research shows 63 per cent of retail executives believe personalisation, or hyper-personalisation, will be “very or extremely important” to their organisation’s application of generative AI in the next three years.
For brands, it’s vital to understand consumer behaviour and to leverage AI to deliver personalised experiences. Hyper-personalisation is all about asking what consumers want when they’re visiting your properties and tailoring the experience to their needs.
This also gives brands critical insights directly from their customers; for example, French Sephora’s Virtual Artist app, powered by AI and augmented reality, lets customers try on makeup virtually.
The app learns from customer interactions and provides tailored recommendations. As customers try out different combinations, Sephora gains insights into preferences, which can inform future product development and marketing campaigns.
US-based Nike is using AI-driven personalisation tools to improve customer interactions. In stores, digital displays adjust to customer preferences, creating a personalised shopping experience. AI tools also help recommend product sizes and styles based on past purchases and preferences.
Another example is online grocery shopping. An AI that combines a customer’s past purchases with current dietary preferences could act as a recipe generator, suggesting customisable meal plans and ingredient bundles. Customers help co-create a meal plan that suits their tastes and shopping habits
Powered by AI, intent-based search technologies can now guide consumers more efficiently through their shopping journey. It’s akin to having a personal shopper or style consultant available digitally.
One example of this is Homes & Villas by Marriott Bonvoy. It’s using an AI-powered search tool to offer a curated list of properties from more than 140,000 premium home rentals across 800 destinations. The tool is accessible and user-friendly, allowing people to input detailed descriptions of their desired holidays with natural language search.
Along with property suggestions, the tool can also provide information such as local weather conditions and activities such as sightseeing and dining options. A key aim is to alleviate the stress of planning and booking a holiday. Consumers who don’t want AI assistance can still access traditional search methods – providing choice remains critical to a successful retail strategy.
Another example is Amazon’s AI-generated review summaries, which provide brief overviews of product reviews, enabling customers to make informed decisions without reading through extensive reviews.
The application of GenAI goes beyond digital interactions. It enhances in-store experiences by integrating technology with physical retail. Personalised shopping assistants on mobile apps can now guide customers through stores based on their preferences and shopping history, providing a seamless and personalised shopping experience. Store associates can use facial recognition to help the customer based on their needs.
True Fit is an AI-powered personalisation tool that helps retailers enhance the shopping experience. It asks customers for basic details like height, weight and preferred brands, then suggests the best-fitting sizes. This helps shoppers understand how sizing varies among brands, minimising returns and improving sales.
Virtual fitting rooms and smart mirrors, equipped with GenAI and augmented reality, can also help people choose clothes more easily. By customising outfits, such as shortening a sleeve or lowering a hem, AI learns to suggest what other available styles they may like. It also speeds up the physical try-on process: if shoppers can get an immediate idea of how a particular item might look without having to change their clothes, they’ll likely take fewer garments into the cubicle, shortening queues and reducing re-shelving work for staff.
Leading US retailers such as Walmart, Lowe’s and Home Depot, are already capitalising on these advancements, and more will follow suit in 2025. They are implementing personalisation at scale, using customer data to know what consumers are looking for when they come to the store or the site, driving sales and enhancing the shopping experience.
GenAI is an exciting opportunity for retailers to treat every customer as a co-creator of their own shopping experience. As customers engage, they help shape the products, services, and touchpoints they encounter, making the entire journey more relevant and responsive. This takes out the guesswork for retailers, who can move towards a much more engaged and customer-centric approach.
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