The National Retail Federation (NRF) is seeing AI becoming an operational reality for the retail sector.

A study at the end of last year found that while 77% of retailers currently allocate 5% or less of their technology budget to AI, 39% plan to dedicate more than 10% within three years.

Against this backdrop, the organisers of this year’s NRF Retail’s Big Show Europe in Paris in September have produced a report analysing the AI transformations underway. Among the key findings is that AI is moving beyond optimising operations and is fundamentally redefining the retail business model, opening the door to new sources of value and revenue.

After a period of experimentation, the sector is now entering a phase of large-scale deployment. AI is progressively establishing itself as operational infrastructure at the heart of the strategies of the most advanced retailers.

The results are already measurable. A recent study (cepr.org/voxeu/columns/how-ai-affecting-productivity-and-jobs-europe) by the Centre for Economic Policy Research, conducted among more than 12,000 European companies, estimates that AI adoption drives an average four per cent increase in labour productivity.

This momentum is well underway in Europe, where some major retail players have already gained a head start. Brands such as Zalando and H&M have invested in unified customer data platforms, enabling them to deploy large-scale personalisation strategies while orchestrating every customer touchpoint.

“In Europe, the retail sector has matured considerably in its relationship with AI,” said one of the show organisers Aliyah Khaki, technology innovation manager at UK retail chain Marks & Spencer (www.marksandspencer.com). “The experimentation phase is now behind us. What matters now is what actually works.”

The most compelling example is retail media. While the growth of online advertising networks has attracted the most attention in recent years, the next battle is being fought in-store. The vast majority of grocery and convenience purchases in Europe still take place in physical stores, a colossal opportunity to monetise foot traffic that the most forward-thinking retailers have clearly identified.

Through technologies such as connected digital screens, electronic shelf labels, managed audio environments and smart shopping trolleys, points of sale are being transformed into fully programmable and measurable media channels, giving partner brands privileged access to consumers at the precise moment of purchase.

While the European market still lags behind the USA, where retailers such as Walmart and Kroger already generate hundreds of millions of dollars annually through their retail media networks, the gap is closing rapidly. Tesco, through its Dunnhumby infrastructure and Tesco Media and Insight platform, has established itself as one of Europe’s most advanced players. Other retailers such as Carrefour, Ahold Delhaize and Lidl are now investing heavily in comparable infrastructure, driven by margins structurally far superior to those of traditional retail.

“AI is not only changing what we build, but also who we build it with and how we do it,” said Anika Vooes, chief acceleration manager at Rewe Digital (www.rewe-digital.com). “The companies that will create lasting competitive advantage are those that combine technological progress with deep organisational transformation.”

As AI adoption accelerates, not all retailers are progressing at the same pace. The real dividing line is no longer between those that use AI and those that do not. It lies between those deploying isolated tools and those that have built an integrated system capable of circulating data across the entire organisation.

Retailers that have invested in a unified AI infrastructure – one that connects demand forecasting, personalisation, inventory management and customer experience – can concretely measure their performance and adjust their strategy in real time. This approach allows the entire system to self-feed and continuously improve in step with customer interactions.

In this context, competitive advantage is not built through one-off experiments, but by making AI the structural backbone of the entire operating model. The retailers that have taken that step could be best positioned to turn AI’s promise into lasting, measurable and concrete performance.

The NRF Retail’s Big Show Europe (www.nrfbigshoweurope.com) takes place from 15 to 17 September 2026 in Paris, France.