Commerce Voice catches up with Global Director of Retail Strategy & Insights at CI&T, Melissa Minkow, to get the lowdown on what’s really going on with the retailer/consumer dynamic and why it’s suddenly the latter who’s in charge.
Melissa has had her finger on the pulse of all things retail, not just for the past five years at CI&T, but also as a Senior Principal Advisor at Gartner and a Business Analyst in Target. With a wealth of historical knowledge on retail trends, she’s ideally placed to identify the patterns that allow her to predict just how tech and specifically AI is influencing this power shift.
The most striking thing to note is Melissa’s assertion is that retailers are falling behind. Having notoriously been quick to jump previous bandwagons and then be forced to drag the consumer along, consumers are going native with new tech far faster than retailers can manage to keep up.
“Retailers have tended to introduce technology before consumers were ready for it. This is the first time that consumers are embracing technology in the shopping experience before retailers are fully ready. Retailers are nowhere near as quick to embrace agentic commerce as the consumer is,” she reveals.
Retail customers are in the driving seat
What does it mean to be faced with a newly tech-savvy consumer base? Essentially, the consumer is in charge because they are armed with all the facts. They are using AI tools and agentic commerce in particular to sift through a wealth of information to understand exactly where to find the right product at the right price for their specific needs.
“The consumer is extremely well-informed. They have AI at their fingertips to be strategic and make calculated purchase decisions.”
Prior to agentic commerce, wading through the information would have been a barrier for consumers. Loads of tabs open, multiple sites surfed, several searches made. Bouncing from one retailer to the other to gather information. Now, consumers using agentic commerce are seeing that information aggregated in the ‘digital mall’ – a third-party resource consolidating everything they need to know with the full purchasing journey all in one place.
It’s something Melissa has had her eye on for some time. “A few years ago I predicted that the super app would be the future of retail. Lots of retailer apps under a single app so you don’t have to leave it. It’s effectively a digital mall and it’s much more convenient for the consumer. Consumers are adopting agentic commerce for the same reason – they don’t have to close out a bunch of tabs, they can access all the different brands and retailers in one.”
Choice is not the enemy of loyalty
One reason retailers may be dragging their heels when it comes to embracing this kind of digital mall is the potential implications for loyalty. Keeping the consumer within your own four digital walls may make it seem that keeping the sale is more likely, while opening it up could drive consumers elsewhere. However, Melissa suggests, consumers are already ‘curating’ their shopping experience anyway, and actually her research suggests that using agentic commerce in the UK is making consumers as loyal to brands and retailers – if not even more so.
“Our data shows that the majority of consumers are either equally or more loyal to brands than they were a year ago. Consumers are better educated and they know which brands are better quality. We are dealing with a very empowered consumer. That’s the impact agentic commerce is having on loyalty.
“In the UK it’s making for a more strategic shopper who is shopping smarter but not necessarily more. In the US, however, the majority are also shopping more,” she adds.
The great experience myth
Strategic, product comparison and getting the best deal are all important but agentic commerce is also a myth-buster – that the consumer prioritises experience over efficiency. Could it be that retailers have been getting it wrong for years?
“This is how Amazon maintains such a strong share of market. Respectfully, it’s not an engaging experience but it’s informative and efficient and that’s what the consumer wants. The less time a consumer spends on a site, as long as they convert, that’s a better indication of NPS and happiness,” Melissa insists.
The consumer still wants those moments of discovery, the opportunity to browse. But not necessarily when they have an objective: Get in, get the item of clothing, get out. To critics who suggest that agentic commerce may actually narrow discovery and create a purely transactional experience without scope for up or cross-selling, she says this: “With any algorithmic model, you run the risk of streamlining towards the same thing. My hope is that retailers protect against that and purposely create personalised algorithms that are dependent on the person. That’s why TikTok has been so successful. Its algorithm is democratised and caters to the individual.”
And agentic does foster opportunities to deepen retailers’ and brands’ relationships with the consumer through innovative tools and targeting. Melissa suggests a budgeting tool, for example, or a ‘find me this’ agent where you can upload a picture of a shirt or bag for a specific event and ask the agent to find retailers with similar items, plus complementary ones that could create a whole look. Convenient, yet also discoverable. “Within the next several years, we’re going to have a way more personalised shopping experience with agentic as the backbone,” she predicts.
Retailers and brands must find the missing data link
The ball isn’t all in the consumer’s court. There are definitive benefits to retailers and brands to build their own agentic tools. These digital malls aren’t just a point of convenience for the customer, they’re a source of rich, first-party data for brands – data that some haven’t been able to access until now. “Prior to agentic commerce, we had FMCG brands asking how they could access all the data that retailers have at final point of sale. They didn’t have that consumer first-party data because their sites weren’t shoppable. There’s a lot of data flowing through the third-party agent now that the retail brand doesn’t have,” Melissa insists.
This is another reason why the current resistance on the part of retailers – or perhaps sluggishness is a better word for it – defies explanation. Data has been the holy grail for both retailers and FMCG/CPG sectors and partly the reason behind the explosion of Retail Media in recent years. Retailers and their brand advertisers have been able to use the data flowing through retail media, both on and off-site, to deliver more targeted messaging in ways that were not possible before when customer data was more opaque – at least for the brands. Agentic commerce has the potential to transform this.
“There are many opportunities that are being missed out on and retailers haven’t embraced it as much as we’d like,” Melissa warns. “The most resistance is building their own direct to consumer agents. This goes back to loyalty and the first miles in the path to purchase. Third-party agents are the ones collecting all the data. A proprietary agent that offers a differentiated experience is a great opportunity for first-party data capture.”
So, should retailers be at panic stations? “Nothing gets accomplished if there’s panic but our recommendation is to prioritise this as urgently as possible. This isn’t the future, it’s the present,” she adds.
There is certainly still an element of experminentation and nervousness around implementing agentic AI from all sorts of angles – skill sets, ROI, ethics, data and more. But this is also not a reason to stand still because that almost certainly means being left behind. Melissa’s final words of advice for retailers? “Chop, chop.”
