402. How agentic AI is redefining the future of retail

[MUSIC] The user experience is going to improve. The other thing I think that will improve is right now, it's a very transactional, focused capability to improve frictionless buying, and to make your life more efficient. But eventually, we're going to see this technology evolve into inspiring loyalty and inspiration and emotion, which some of the luxury retails in particular are going to really capitalize on. So it's a really neat space to watch. We think five years from now, the first native AI generation, Gen Alpha, is really going to propel this channel into parity with e-commerce as we know it today in brick and mortar as we know it today. In the same way, millennials did so for e-commerce. [MUSIC] Welcome to Retail Gets Real, where we hear from retail's most fascinating leaders about the industry that impacts everyone, everywhere, every day. I'm Bill Thorn from the National Retail Federation coming to you from NRF 2026. Retails very, very big show in New York City. And on today's episode, we're talking to Ali Froman, partner and US consumer markets industry leader at PWC. And Barbara O'Burn, head of global enterprise business development and CEO of Stripe Europe. We're going to talk to Ali and Barbara about the significant impact of the genetic AI is having on the retail industry, both today and beyond. And how the two companies are partnering to guide retailers into the future. Ali and Barbara, welcome to Retail Gets Real. Thanks Bill. Thanks, it's great to have you here. So what do you think of the big show, just as it's big? It's amazing. It is amazing. Energy is contagious. Just so many great conversations, so much AI everywhere, robots are everywhere. I feel like they're reaching a state of maturity to from where we saw them last year and they're going to be able to do a lot more. For sure. Is this your first? So this is your first? No, not my first. Barbara? Not not my first year either. But again, it just gets better every year. It's interesting, I've been thinking about what this was like 12 months ago. And some of the conversations we had 12 months ago were around AI. But a lot of it was thinking about backend processes and how do I automate my systems, some customer service. But now all the conversation is about agent at commerce. It's just incredible the speed of change within. And I think it's great to come to NRF because it's a real mark in the sand every year of what's been changing. And the speed of change this year has just been incredible. It has been. And I think the theme, as we were thinking about that a year ago, the theme of next now really does pertains. The change is moving so quickly, just keeping up with it isn't very easy. And that's what I want to talk about. I want to talk about agentic AI. Now, Ali, when you use the phrase agentic AI, what exactly does that mean? Well, I agree with Barbara. Agentic AI is probably the busiest term in retail right now. What I view it as is it's AI that acts, not just advises. Most gen AI tools that we've had prior to agentic AI were co-pilots that could help you search and compare and discover. And now agentic AI goes even further than that. You can give it a goal. It can help you browse options, help you evaluate trade-offs. And increasingly, it can complete purchases on your behalf. And that is what was the most exciting innovation that probably came faster than any of us expected in the last 90 days or so. Well, what recent innovations have made agentic AI more viable now? I mean, where are we seeing retailers feeling that shift first? Yeah, well, first of all, the models improved dramatically. It's now much better at reasoning and planning and maintaining context across multiple steps than it ever was even a month ago. It seems to be evolving every single day. Second, the commerce and payments infrastructure caught up. And that's where partners like Stripe come in. They really helped accelerate the ability for the payment infrastructure in particular to catch up to the consumer interest in using AI as a commerce assistant. And then third, we're seeing an emergence of controlled autonomy is how we describe it. So consumers are more willing to transact through AI. They're trusting it more and more. I think this is being propelled by younger generations like Gen Alpha and Gen Z in particular. But millennials are using it more and more for convenience in everyday life and commodity purchases. So I think the consumer is starting to be a little less skeptical. And retailers kind of first felt the shift earlier on in discovery. And now we're seeing a new phase of commerce where it's not just being used, identical elements or not just being used to help discover. They're being used to transact. And we see this as a new front door of retail, brand new shopping channel. Yeah. Well, Barbara, I mean, you are definitely thinking about this all the time. How do you think about agente commerce? I mean, where do you see it already showing up? I think before I even get into agente commerce, Stripe is an infrastructure company that is built to move money around the world. And we create the infrastructure for platforms, for direct enterprises, for startups, for market places, across payments, billing, a whole bunch of ways to move your money. And last year we moved 1.4 trillion dollars. Businesses on Stripe generated this much is kind of up at 40%. So we see that commerce is happening. And I accelerated the rate online, what also in store. So we take this mindset of creating the infrastructure to move money frictionlessly across borders to how we think about agente commerce. And we think about it primarily in two ways. One is autonomous agente AI where the commerce is happening on behalf of the buyer. And that could be a consumer and it could be a business. The other way that we're thinking about it, and I think this is where more of the conversation is evolved over the last six months, particularly, is commerce that happens in an AI surface. So that may be open AI, your chat GPT, it might be co-pilot now, which we're not partnering with Gemini. All of these areas where the consumer behavior has changed Ali's point. Before, I think we've gotten quite used to in the last 20 years of going into a search engine and looking for something, searching some keywords, doing a browsing, considering it coming back. And the search and evaluate is happening in a very, very different way and it's a conversation. And what the big advance we've seen in the past six months, particularly, is now that commerce can happen in the same surface. So it's not that I think there will be a lot of evolution and we'll continue to innovate around that autonomous agente part. But now a lot of the conversation is how can I ensure I meet my customers where they are? My consumers are in chat GPT, they're in co-pilot, they're in Gemini. That's where they are having a deep conversation and making the evaluation. How can I ensure we take the same mindset of beautiful customer experience, frictionless commerce and enable them to act in the same surface and not be redirected? So for retailers, I think this creates an interesting new disruption. And it really is the speed of this disruption has been so fast, is how do I play in this space? How do I start to interact? And I think there's a lot of conversation that's happening at the moment all the way from how do I surface my products here and what we're deeply thinking about in stripe is when your product is surfaced, how do we help you facilitate that commerce to ensure it's as frictionless and as beautiful as possible? That's awesome. So Ali, you've described agente commerce as a structural change, not a passing moment. Tell us more about what that means. Yeah, we think this is a structural versus a cyclical change or a, you know, flash in the pan change for a few reasons. First, AI is moving to the top of the shopping fun. So consumers are increasingly starting with the AI agent on their product discovery journey, which is exactly what Barbara was describing. And they're using it to interpret their intent to evaluate trade-offs, they're comparing prices, they're having a conversation. This is especially happening for what we would describe as high consideration purchases. And that doesn't just mean very expensive purchases, but it can mean something that's important to your well-being or your health or self-improvement related things. So the most important decisions in someone's consumer life are happening with the help of AI. And that's new. That's really new. Second, this behavior, it's becoming mainstream. So I mentioned the younger generations are using chat GPT in particular. I think 67% of people age 13 to 34 are using chat GPT almost daily, which is a stagger in statistic. But by 2030, we anticipate close to 50% of Gen X is going to allow AI to purchase on their behalf. That's we're surveying all the time, all the different generations. How much do you trust AI? What would it take to allow you to delegate purchases to AI? And even Gen X, who's been a little bit behind some of these younger generations, they're saying, you know, it's things like a money back guarantee or the ability to approve a purchase before it happens or to turn it off at any time. These aren't insurmountable hurdles to trust the AI agent to purchase on your behalf. So we think that it's coming. And our broad prediction is, you know, we're in the early innings, the user experience isn't optimal yet. It doesn't yet connect merchant data to, for example, if you're a Walmart customer, your merchant data as a Walmart customer isn't yet connected to your purchase that you make of a Walmart product in chat GPT. So your purchase history doesn't carry over your loyalty points, don't carry over. But that's going to change and evolve. So the user experience is going to improve. The other thing I think that will improve is right now it's a very transactional focused capability to improve frictionless buying and to make your life more efficient. But eventually we're going to see this technology evolve into inspiring loyalty and inspiration and emotion which some of the luxury retails impresses. particular are going to really capitalize on. We think five years from now, the first native AI generation, Gen Alpha, is really going to propel this channel into parity with e-commerce as we know it today in Brick and Mortar, as we know it today. And the same way millennials did so for e-commerce. - That's amazing. And again, it will probably initiate that conversation that I hate so much, which is, will this be the death of Brick and Mortar? - We don't think so. I'm curious, Barbara's thoughts. We think it may just, I mean, and it's different for different types of products and categories, of course. I think there's no way luxury retail goes away as an experiential lifestyle purchase in a store. But there is, talking to my chief economist recently, she had a recommendation that many retailers should consider the Brick and Mortar store as a marketing expense. - Oh wow. - Because in the future, it may serve that purpose more than anything else as a showroom or a branding opportunity for a product versus a place to transact. I don't know that I agree with that extreme for everything, but I think for commodity categories, you can certainly see it moving that direction. Why not delegate your agent to buy you replenishment type items like eggs and milk and toilet paper? - Right. - You know, that should be invisible shopping behind the scenes. - I think that trend has been ongoing for a while. It would accelerate potentially with the use of your agent to commerce, but the notion of the store is a place to come and experience my brand, to touch and feel it, to have a sense of joy. I think the younger generations are spending so much time on screens that they crave that in person, to talk to a lot of their weekends, are spent going to stores with their friends, having an experience. The commerce might not happen there, the commerce might happen elsewhere, but a agent will be part of that mix, and I think that's a disruption that's been ongoing for quite a while, and retailers are still getting their arms around it. The ones that do it well, when you walk into a store, just the sense of craft and beauty, can be exceptional. - Couldn't agree more. I think the younger generation, we say they're very paradoxical, 'cause they're digitally native, but they love shopping in stores, to touch, feel, sense, you know, all the things. However, although their foot traffic increases month over month for the most part in brick and mortar stores, their sales don't correspond with that. So this is where you think about the store of the future. You know, what is the purpose of it? Is it really meant to capture their wallet or is it meant to just give them an amazing experience? We also know experiential services in general as a category are going up. That's a big prediction for 26, like services that relate to wellness and spa, and functional medicine and well-being. They're all growing exponentially already, and we'll continue to do so into this new year. - Well, let's talk about the partnership. So this is a pretty new partnership. October, I believe, of last year. So weird to say last year, it seems, it's yesterday, but anyway, tell us about the PWC and start strategic partnership, and how do you help retailers move from strategy and experimentation into real executionally? - Yeah, so we are so excited to be partnering with Stripe in this emerging agentech commerce space. It's a great partnership. So, from the PWC side, we bring what I would describe as speed to value, into end value chain expertise. Stripe is the payments infrastructure. You know, they're innovating every day, expanding their stack. We come in across merchandising, pricing, digital supply chain and payments, helping retailers build those capabilities and connect them to pieces from strategy into action, efficiently without creating complexity. And it really all starts with pilots. I think this is something we agree adamantly on. This is a space that isn't going away, that everyone should be experimenting with, and it's inexpensive to pilot, and to partner with people like Stripe and with us. I mean, you know, to do it early, you can learn so much from piloting and then figure out your further investments from there. - Well, Barbara, from your perspective, from Stripe's perspective, what capabilities does Stripe bring to that partnership? - One of the things I love about working in Stripe is it is incredibly innovative place to work. It feels like I'm working in a different company every six months, and we're in such a privileged position at the moment that we are working so deeply with AI agents and AI platforms. We're working with 80% of the top AI startups in the world or are built on Stripe. We are working with platforms with retailers, and it puts us in this position where we can really start across populate trends that we're seeing in even, like, B2B software, where there's innovation happening there with AI through to startups and platforms. So with that, we are advancing our capabilities and we're building that infrastructure, and we're trying to abstract away the complexity for retailers so that they don't have to worry about all of the areas and all of the plumbing under the hood. But for many retailers, I think the world is changing so fast and it can feel, it's funny, what I've heard a lot from retailers of all sizes over this weekend is, we feel like we're so far behind. And everybody feels like they're so far behind. So as an infrastructure company as a highly innovative financial services and technology company, our partnership with PWC allows retailers to access that level of innovation and to think it through from a, what is our strategy? How do we prioritize? Where do we go next? And then we can come in and help with that conversation on where to prioritize how to get ready and really marry the, what should we do with the how? Right. It's really interesting when you say that you can talk to these folks and they're like, we already feel like we're behind. Will anybody ever feel like they're ahead? I mean, it just seems to me that because the technology and the innovation is moving so quickly, are you really ever going to capture the whole breadth and depth of what this means to your business? I don't know. I mean, I've been working in retail technology for a long time and I think back into there, what feels like the distant past now in the early 2010s when search and mobile were really starting to coalesce. I think retailers had time to think through what's this going to mean for me. How am I going to adapt my business to e-commerce? How are we going to manage SEO? Right. And consumers were learning as well. I mean, I had a Blackberry in 2010. I think how far we've come. I remember sitting with a retailer a long time ago at the time and they were thinking, I just don't really think people are going to buy items this big online. But if you fast forward now even 15 years, how much the world has changed, how much more educated and savvy the consumers are, the pace of change that we have seen in e-gented commerce is nothing like I've ever seen before. So the disruption is coming. Retailers are innovative. They're used to disruption and change. I think the speed of this is what is so different than what I've experienced in the past. And it's not just the technology driving the change. We always say the customer's moving at the speed of culture. And customers are shifting from where should I shop? To what should I buy? And they are looking for outcomes. They're shopping outcomes, not categories. So when you couple that together with the pace of technological change, no, I don't think anybody is ever going to feel like they're ahead. But I think that's the goal. It's the goal, not just to-- we talk a lot about meeting the consumer where they are. The goal is to get ahead of the consumer and help them figure out what they want before they even know what they want. And I do think AI has the potential to help retailers get there. But the thing to maybe give everybody, give themselves grace, we're in such early innings. No one has this figured out. Even the players with the greatest scale that have moved first don't have it fully figured out. They are moving fast, and they're absolutely will be first mover advantages in this space. But eventually, people are going to iterate. We're going to learn from others, lessons, and apply them to our own, and potentially have an opportunity to leapfrog. So I think the key is just to reiterate a previous point-- pilot. Just start experimenting. Yeah. It's interesting, because I've set it before. Still believe it. And more conversations I have. It's the breadth and depth and the potential for this technology and this innovation. It's just almost staggering. And when you try to capture it all in your mind and piece it out. And I always say it's kind of like the idea that the universe is infinite. I just can't get my arms around that. So it's got so much potential. Allie, what is your advice to clients looking to get started with AI? I know the piloting, but I mean, there's something that they can do to kind of step-by-step moving to this space. Yeah, there's a few pieces of advice we'd give retailers after the last 30 to 36 months of Gen AI being on the scene. I think we learned a lot through that initial period of experimentation. Number one, make AI part of your business strategy. So AI shouldn't just be a technology strategy driven by your CIO or your IT department. It should, in fact, be driven by the top down and it should help accelerate your business strategy or empower your business strategy that you already have. Separately from that, we really believe in what has been referred to as a bi-modal approach or a hybrid approach around getting AI into the hands of your teams. But do so in a very intentional way, not in a throw spaghetti at the wall way and see what sticks. We've learned a lot around where the ROI is and what functional areas, what types of pilots have worked, which ones haven't. So really take a page out of the book of those who have gone before you. A lot of other industry sectors were first movers before retailing, insurance and legal. There's things to learn, even though those aren't the same sectors and take the low-hanging fruit that can give you real P&L outcomes and then use the savings that you may get to reinvest in innovation. growth. With all of that in mind, you know, it's the what comes next. You know, for leaders who know AI matters, but they aren't sure where to focus first. How do you help them to think through those priorities, Allie? I mean, you know, every business is different. I'm going to be interested in your take on this too, Barbara, but I mean, every business is different. How do you get them engaged and excited about what the potential is? So what we say is scale matters, speed matters more, and innovation matters most of all. And it's not so much that it's a question about technology or technology strategy. It's a people challenge and a leadership challenge. It's really the 80/20 rule there. The technology is amazing and it's going to continue to evolve at an astronomical pace. So it's not going to be worth much if your teams aren't adopting it, right? If they're, if they feel threatened by it. So you have to really think about a strong change management strategy and a very strong top down leadership approach. And then the other thing we've learned is you need to set accountability, KPIs and incentives around outcomes that you're looking to achieve from your business strategy powered by AI. And with all of that, we should start seeing real tangible financial outcomes, both top and bottom line. And there's nothing wrong with looking at us in efficiency or productivity play. A lot of companies start there, but where we think the real value is, it's on the top line. And that's where many companies have only begun to scratch the surface. But that's where this agente commerce opportunity comes in. It's a growth opportunity for sure. For sure. Barbara, what are your thoughts about that? I think broader commerce is going to evolve in radical ways in the next few years. So I think commerce will be more distributed with more opportunities for merchants to sell. And it could be with AI agents across platforms. It could be in ways that we can't even envision that don't feel like commerce. Some will be conversational, some will be autonomous, like mentioned. And that's already happening in a software space, just not as much in the consumer space. And I think the winners will be businesses that can do three things very well. First, they can make their products legible to AI. So we have optimized for a human readable world. That now needs to become machine readable. So Stripe has been involved in creating an open source protocol, the agente commerce protocol, to take your product catalog and ensure that your inventory, your pricing, your product descriptions are live and readable by AI agents. So get ready. I think that's the first thing I would recommend to everybody. Even if you think you don't want to participate right now in AI commerce and agente commerce, get yourselves ready because it will come faster than you expect. The second thing for the winners, I think that will do very, really start to do well, will they will manage trust. When we started on the journey of building out the agente commerce suite, it was interesting when we talked to both the AI platforms and to big retailers. They had a very similar sense of concern set of concerns. So who will be the merchant of record? Does open AI want to do returns for the genes and the socks you bought? No, they don't. So it's ensuring that the retailers continue to have that control. They are the merchant of record. They maintain that trust because consumers also want to know who they're buying from. So how do you ensure that you have trust built into the system and the agente commerce fraud is huge? How do you ensure that when the high intent purchase has passed through to a retailer, that you are on, this is what Stripe has built with our shared payment token, that you are passing through fraud signals. We spend a long time blocking bots. Now we're saying to bots come in and have a look at my website. How do I know which are the good bots and the bad bots? So the winners will be the ones that continue to ensure that that trust, that the fraud, that that is all really well baked into their systems. And third, they'll be flexible because as we mentioned at the start, what we saw today, or we're seeing this weekend, is so radically different than what we saw 12 months ago and it will be very different in three months as well. So ensuring that you, as you're building out your systems, as you're thinking about your strategy, I think piloting is a great way to start and ensuring you have that flexibility because you, commerce will become more and more distributed and you want to ensure to Ali's point that you're meeting your consumers where they are. Alright, so I got the high sign, we're just about out of time. I do want to ask, so I'm not going to do the full wrap it fire. Normally we do a full wrap fire, but I'm going to just ask you each one question and we'll start with you, Ali. What's the last book that you read to completion? I just read a book called The Air Apparent. It's a fictional book loosely based on the royal family and it was great. I actually know somebody who happens to be my spouse who's reading the single. Yeah, it's a fun one. Like a beat treat. Read it over the holiday. Totally. Alright Barbara, what is your favorite podcast and don't say retail control? Apart from reaching out, it gets real. As you can hear from my accent, I'm based in Dublin and I cannot get enough of NPR. I listen to a huge amount of this American life. I listen to, but I'm an avid podcast listener because I spend three kids, I spend a lot of time doing laundry, working the dog. This American life I think is just such an interesting human perspective. That's a great thing. It's on my list. I enjoy it. Mentally and the NPR ones are very, very good. From a business perspective, I listen to acquired a lot. I love the long form. So I think from acquired, you can really get into what the long story was about that the Starbucks one is incredible. How Microsoft was formed. So I think those ones when you have a lot of time and you can pick and choose it, I really, enjoy acquired. That's totally awesome. Alright, you know, we're going to have to do this again next year. I'm both of you because so much is going to happen over the next 365 days. The conversation will be very, very different. We'll look back on this and be like, "Ah, Tim, we're so. " It seems so pointy. Yes. That was nice, but doesn't even matter today. It's been a pleasure talking with both of you. Allie Barber, thank you for being a part of retail goods for you. Thank you, guys. And thank you all for listening to another episode of Retail Gets Real. You can find more about this episode at RetailGetsReal.com. From Retail's Big Show in New York City, I'm Bill Thorn. This is Retail Gets Real. Thanks for listening until next time.