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The retail industry is emerging as one of AI's biggest commercial winners, forcing companies to embrace bots as buyers and incentivizing rivals to work together to capture new business.

Why it matters: While creative sectors try to prevent AI companies from scraping their content, retailers are inviting them in and betting AI shopping assistants will become a new source of customers.

State of play: Retail has moved quickly to establish new standards and practices to usher in agentic commerce. 

In January, Google launched the Universal Commerce Protocol, an open standard that makes it possible for AI assistants to broadly integrate product catalogs from a vast number of major retailers across the web. 

The standard was co-developed by several companies including Shopify, Etsy, Walmart, Wayfair and Target, and has backing from the world's biggest payment providers, such as Mastercard, Visa and Stripe.

That level of early ecosystem support is unusual, but the impact is promising. 

By the numbers: Early data suggests AI-powered shopping assistants and recommendations send higher-intent shoppers who convert at higher rates than traditional search traffic.

AI-referred shoppers converted 58% better than visitors from non-AI channels during the second quarter, on average, per Adobe. These shoppers spent 53% longer on retail sites and browsed 20% more pages per visit.

More than half of AI-referred sessions start on product pages, compared with 20% for organic search, according to Shopify data from Q1 2026. The average order values from AI-referred sessions were 14% higher than organic search.

A line chart comparing AI and non-AI conversion rates from October 2024 to October 2026, indexed to the starting non-AI conversion rate. AI surpassed non-AI in September 2026. As of June 2026, AI showed 595% growth and non-AI showed a 9% decline.

AI and non-AI conversion rate

Data: Adobe; Chart: Danielle Alberti/Axios

The big picture: AI agents and search interfaces are replacing much of the research consumers used to do before reaching retailers, helping to focus marketing expenditure and lower customer acquisition costs.

"These are essentially pre-qualified leads," says Vivek Pandya, lead analyst of Adobe Digital Insights, with shoppers using AI to research products and narrow their choices.

AI currently has the greatest influence at the top of the funnel, says Mike O'Donnell, head of AI at Omnicom's Flywheel. That matters because top-of-the-funnel brand marketing is typically more expensive than hyper-targeted performance ads.

Zoom out: The promise of agentic shopping has forced retailers to shift their marketing strategies to welcome bots rather than fight them.

Shopping queries are becoming more detailed and conversational, forcing brands to rethink websites and product content as inputs into AI recommendation systems, not just destinations for human visitors.

Instead of searching for "red lipstick," a consumer might ask, "I need a red lipstick for brown skin under $5 — I'm going to France," e.l.f. Beauty chief technology and AI officer Ekta Chopra told Axios last month at Cannes Lions.

Because AI engines are much more likely to elevate organic media over paid marketing, detailed product attributes, image descriptions and accurate inventory data are critical. Chopra says e.l.f. has created a dedicated agentic commerce readiness team.

A line chart showing the change in AI-driven retail visit share from an October 2024 baseline to June 2026. The share increases steadily, reaching a peak of +1,355% in June 2026, after a notable rise beginning in early 2025.

Change in share of online retail shopping visits driven by AI

Yes, but: As retailers embrace AI answer engines, they don't want to surrender the customer relationship.

Instacart CMO Laura Jones says her company has "integrations with all major LLMs" but sees its first-party data — 1.6 billion transactions — as its competitive advantage. "We're being very thoughtful about what data gets shared and what doesn't," she told Axios at Cannes Lions.

Through loyalty data, purchase histories and category expertise, retailers have deep knowledge of customer behavior, Ulta Beauty CMO Kelly Mahoney says. 

Reality check: Brian Monahan, senior vice president of retail media at Albertsons Media Collective, says the company sees AI as a way to improve, not replace, the retailer's experience.

"We're going to obviously work with the big answer engines because we want to partner with them," Monahan says. "But I don't wake up with existential dread that my retail business is going to evaporate into an LLM somewhere."

With that in mind, retailers also are modernizing their own sites. 

Walmart is investing in its Sparky shopping assistant. Amazon is integrating Rufus more deeply into Alexa and its core shopping experience. Albertsons created an AI shopping assistant, powered by OpenAI models.

The bottom line: An AI assistant may reorder shampoo, paper towels or pet food, but people still enjoy some shopping as a form of entertainment and self-expression.

"The winner is going to be the one that understands the customer," Mahoney says. "In this world where it's all very digitized, the human experience is becoming even more and more important."

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Illustration of two shopping carts with spiral lines in the backgruond

Illustration: Sarah Grillo/Axios. Stock: Getty Images

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