The rise of AI shopping: Is it the end of retailers’ direct relationship with customers?

The introduction of AI-powered shopping assistants like ChatGPT’s shopping feature, TikTok Shop, and other intelligent platforms is rapidly transforming how shoppers discover and purchase products.

These tools offer conversational, highly personalised recommendations, curated product lists, and instant access to reviews and comparisons - all within a single interface. For many shoppers, this means less time spent browsing individual retailer websites and more reliance on AI to guide their decisions. In today’s time-poor world, this presents an attractive proposition which presents a threat to traditional retail.

Historically, retailers have built strong, direct relationships with customers through personalised service, loyalty programmes, and branded experiences. However, as AI shopping channels become central hubs for product discovery, retailers risk being reduced to mere fulfilment centres. Consumers may never visit a retailer’s website, instead relying on AI platforms to recommend, compare, and even facilitate purchases. This shift threatens retailers’ ability to control the customer journey, gather first-party data, and foster brand loyalty. 

While the rise of AI shopping channels poses significant challenges, it does not necessarily spell the death of the retailer-customer relationship. Instead, it demands a redefinition. Retailers can adapt by:

• Integrating with AI platforms: Partnering with AI assistants and marketplaces to ensure their products are discoverable and their brand remains visible. 
• Investing in personalization: Leveraging their own customer data to deliver unique, hyper-personalised experiences that AI platforms cannot easily replicate. 
• Building community and loyalty: Focusing on emotional connections, exclusive content, and community engagement to retain customers beyond the initial purchase. 

Retailers who embrace these changes, by integrating with AI, enhancing personalisation, and investing in brand loyalty, can maintain meaningful relationships with their customers, but care is needed. 

1. Data protection and privacy

As retailers seek to leverage customer data for personalisation and integration with AI platforms, they need to consider data privacy and protection at an early stage. Retaining ownership of customer data is key, but this brings with it heightened obligations under data protection laws. Retailers must obtain clear consent for data collection and sharing, especially when integrating with third-party AI platforms and sharing customer data with those AI partners or platforms can expose retailers to liability, if those partners misuse or inadequately protect the data.

Further, as many AI platforms operate globally, retailers need to consider compliance with international data transfer requirements and compliance with local laws.

2. Trademark and copyright

There is also a risk that retailers will lose control over their brand assets and product information when integrating with AI shopping channels. AI platforms are likely to aggregate, summarise, or repurpose product descriptions, images, and reviews, raising questions about copyright and trademark rights and automated recommendations or review summaries could misrepresent products or brands, leading to reputational harm or false advertising claims.

3. Consumer protection laws

AI-driven recommendations and shopping experiences must comply with consumer protection laws. If recommendations are influenced by paid placements or affiliate relationships, clear disclosure is required to avoid misleading consumers. In addition, it is the retailer’s responsibility to ensure that product information, pricing, and reviews presented via AI channels are accurate and not deceptive.

4. Licensing and agreements

Integrating with AI platforms often involves complex contractual arrangements. In particular, retailers must carefully negotiate contracts to address liability for data breaches, misinformation, or technical failures. Service Level Agreements with meaningful KPIs addressing the need for reliable integration and performance standards are critical, especially when sales and customer service are handled via third-party AI tools. 

5.Government policies

Finally, governments are increasingly focused on including its use in commerce. Retailers may be required to audit or explain how AI-driven recommendations are generated, especially if they impact consumer choice or pricing and they must ensure that AI shopping tools do not perpetuate bias or discrimination in product recommendations or pricing.

The future

In short, the customer relationship is not dead, but it is evolving; those who adapt to AI-driven shopping channels will thrive, but they must first must navigate a complex legal landscape involving data privacy, intellectual property, competition, consumer protection, and emerging AI regulation. Proactive legal compliance, robust contracts, and ongoing monitoring of regulatory developments will be essential to mitigate risks and maintain trust with customers in the evolving digital marketplace.