a quarter (23 per cent) do so in Australia. This is a worrying gap and signals that Australian retailers have significant catch-up to do, particularly in an era of rising cross-border competition with consumer expectations shaped by global giants. For Australian retailers, the primary objectives of AI initiatives, beyond cost efficiency, are customer experience (CX) (70 per cent), revenue growth (63 per cent), brand differentiation (60 per cent) and risk management and compliance (47 per cent). This contrasts with the US, which places even greater emphasis on CX (84 per cent) and risk/compliance (66 per cent). So, what should Australian retailers focus on to avoid losing out in the AI era? The risks of failing to act Retailers who fail to grasp the potential of AI may quickly lose ground in several areas. Many are stuck in “pilot purgatory”, where they believe they have truly scaled AI, but the reality is different. Only 30-40 per cent of AI use cases are scaled across companies. This failure to scale results in a range of problems. If retailers apply AI only for efficiency (assortment, price optimisation) without differentiation, they risk all stores feeling the same to shoppers. In an AI-saturated 2030, a purely efficient but bland retailer will lose to one that offers efficiency plus a unique, branded experience. There may also be an over-reliance on promotions versus loyalty. Without using AI to deepen loyalty – through personalisation or rewards – retailers risk falling into a race to the bottom on price. Traditional retailers will also find themselves falling behind digital natives: tech giants and e-commerce natives, such as Shein and Temu, are rapidly experimenting with AI. They’re using gamification, predictive analytics, and hyper-personalisation to drive engagement and sales. If traditional retailers take more than 6 months per pilot, they’ll end up lagging behind the capabilities consumers will come to expect by default. Three key strategies needed 1. Embedding brand DNA into algorithms Despite the importance placed on brand differentiation, Australian retailers are struggling to align AI initiatives with their brand’s unique differentiators. Only 33 per cent of Australian companies embed brand identity consistently across use cases, the lowest of all markets surveyed. This weakens the link between automation and brand differentiation, reinforcing the “sameness risk”. To reach the next phase of maturity, Australian retailers need to operationalise brand guidance so that every algorithmic decision reflects who the brand is, not just what it sells, by embedding aspects such as tone, visual identity, pricing philosophy, and sustainability commitments. 2. Breaking down silos and accelerating wider rollout If an AI model is improving fulfilment or personalisation in one banner or region, invest to roll it out chain-wide. Similarly, accelerate initiatives such as store associate AI tools or supply chain optimisation from test stores to full deployment, with proper staff training to use them effectively. For example, AI agents are emerging as a key competitive differentiator that will define retail’s next battleground. Major international brands such as Walmart are already investing in super-agents such as the consumer-facing Sparky to replace search-based navigation. The good news is that 80 per cent of Australian retailers are currently investing, and the remaining 20 per cent are planning to. But this investment and the resulting pilot projects must make it to successful rollout. 3. Establishing AI governance to ensure continued customer trust Retailers need to establish an AI governance board to approve and review AI use cases for ethical and brand alignment. This ensures innovations such as dynamic pricing and automated promos don’t undermine customer trust or the brand promise, and that communication with customers and staff is transparent. Currently, only half as many Australian retailers are “very likely” to embed values and policies in AI agents as their UK peers. Encoding ethics, fairness, and sustainability into AI behaviour is how brands will ensure automation aligns with their identity and promises. The uneven maturity across regions suggests that AI readiness is no longer about intent but about the depth of execution. Australian retailers must accelerate infrastructure, governance and data quality to compete with early movers – taking bolder steps if they want to survive and thrive in the retail landscape of tomorrow, where personalisation, automation and brand-differentiated AI will define a vital competitive edge. John Costello is the head of retail and consumer for Australia at Publicis Sapient Further reading: GenAI in retail: Bridging the gap between C-suite vision and V-suite execution