Analysis: Retail turns to AI as the industry ramps up its use

Consumers in the United States will be able to buy food as well as pet food, treats and toys via ChatGPT. 

The artificial intelligence (AI) model, owned by OpenAI, entered a partnership with Walmart where American customers can purchase anything they want inside the chat, including pet products, the retailer tells GlobalPETS.

The move, while still in its early stages, is transforming AI chat from a recommendation tool to a sales channel. The promise of this partnership, at least on paper, is to deliver a more assertive path for the consumer through integration between the platform and the retailer. 

Instant checkout

To enable purchases in ChatGPT, OpenAI launched an instant checkout pilot in September in partnership with online marketplace Etsy. It also announced a yet-to-be-announced partnership with the e-commerce platform Shopify, which is currently only available in the US.

But the company says it wants to “expand merchants and regions” and also open-source the technology, so that “more merchants and developers can begin building their integrations.”

In theory, this would allow any business to develop its own ChatGPT shopping tool if it wants.

Accelerating the shift 

The OpenAI project may be limited, but the appeal of AI is almost unanimous among retailers.

A survey with 1,800 retail leaders across Australia, New Zealand, the UK, the US and Singapore, conducted by work management platform monday.com, found that 96% of them “are already implementing, piloting or researching AI agents to streamline their business operations.”

Although most retailers still use AI agents mainly for customer service (55%), many are also investing in marketing and content creation (49%), sales assistance (48%), operational efficiency (46%) and inventory management (44%). 

A report by Mordor Intelligence noted that AI is expected to grow exponentially in retail over the next 5 years, rising from a market size of $14.2 billion (€12.2B) in 2025 to $96.1 billion (€82.9B) by 2030. 

While the market intelligence firm also acknowledges that “initial costs are significant,” it notes that “the return on investment is driven by faster customer flow and deeper insights into shopping behaviors.”

How pet retailers are embracing AI

In the pet retail sector, the adoption of solutions is not yet as advanced as the OpenAI and Walmart partnership, but it has emerged in different ways, whether by improving recommendations, helping identify fraud, or managing inventory.

In July, Petco Mexico partnered with the AI platform Relex Solutions to “leverage AI for improved forecasting, replenishment and inventory efficiency.” 

The technology was aimed at improving seasonal planning and integrating operations across stores and distribution centers. It is also a way to better prepare promotional activities, export requirements and timelines, and manage e-commerce sales. 

Last year, British pet retailer Pets at Home partnered with Microsoft to adopt its Copilot Studio, “where a business can create AI agents to act in support of different areas of the business,” Microsoft says. 

According to the tech firm, Pets at Home created its own agent to investigate potential fraud and integrated data from across the business to accelerate decision-making.

“We have some fantastic data – there are 8 million customers in our Pets Club, with 10 million pets. We’re using machine learning and AI algorithms to produce recommendations for next best actions,” William Hewish, Chief Information Officer at Pets at Home, said at the time.

And in Australia, Petbarn launched a customer-facing AI solution called PetAI at the end of 2024. It starts like a chatbot but also offers recommendations based on in-store knowledge and online information from Petbarn and Greencross Vets, the company says, gathering data from multiple streams. 

From the queries, the AI agent can also offer pet care advice and bookings, but it cannot diagnose the pet or prescribe any medication, for example.

The solution was also made in collaboration with Microsoft. According to the multinational tech firm, several of its technologies were used to create the service, including Azure OpenAI Service, Azure AI Search and Azure App Service. “This combination of technologies enables PetAI to give customers highly personalized recommendations on products,” Microsoft says. 

Trade vs. barriers 

The World Trade Organization (WTO) recently released a report on the implications of AI use in commerce. Its main finding was that the technology has the power to boost trade by nearly 40% by 2040, “thanks to productivity gains and lower trade costs.”

But this positive impact will only happen if gaps are bridged. One of the strongest gaps identified by the organization is the digital divide between low-, middle- and high-income economies. 

This also includes uneven access to “raw materials, semiconductors and intermediate inputs,” WTO says, either due to economic constraints or trade policy barriers.

“The number of quantitative restrictions applied to AI-related goods has climbed sharply over time, from 130 in 2012 to nearly 500 in 2024,” it states.

The monday.com research also pointed to an uneven perception of the technology among retailers: while 90% of all respondents believe AI can help local and independent businesses compete with giant players, that percentage falls to 67% among small businesses. 

But the WTO sees space for growth in retail, classifying the sector as medium AI-intensive, meaning exposure is rising, yet innovation and adoption still lag.