Retailers in Australia & New Zealand embrace AI but lack trust

Australian and New Zealand retailers are adopting artificial intelligence technologies at a rapid pace, but remain hesitant to allow AI systems to interact directly with customers without human oversight, according to new research conducted by monday.com.

The study, which included responses from 500 senior retail decision-makers in the region and an additional 1,350 retailers globally, found that 82 per cent of ANZ retailers are in the process of piloting or have deployed AI agents within their businesses. Despite this uptake, only 9 per cent trust AI agents to independently manage the entire customer journey without human intervention.

Industry perceptions

The research shows a cautious optimism towards AI's potential in the retail sector. Gavin Watson, Senior Industry Lead at monday.com, commented on the findings, stating:

"Retailers across ANZ understand AI isn't just a trend, it's a transformative shift. But access must be fair, and trust must be earned. Our research shows a clear appetite for AI-led innovation, but also highlights where vendors and decision-makers can step up to ensure no business gets left behind."

Seventy per cent of retail leaders participating in the study believe AI agents will have a transformative impact on the industry. However, concerns remain over quality and consistency of AI-generated outputs, as highlighted by 68 per cent of respondents. Consumer scepticism was also cited by 64 per cent as a key concern regarding increased AI involvement in the retail experience.

Watson elaborated, "We're seeing real caution in the market, and for good reason. Retailers are right to question where their data is going, and how it's being used. At the end of the day, protecting the brand-customer relationship is paramount."

The integration of AI within existing business systems poses an additional challenge, with 68 per cent of retailers reporting difficulties embedding AI across multiple platforms. The same proportion also warned that a lack of transparency about AI use could negatively affect brand loyalty.

Watson noted, "To truly unlock the benefits of AI, retailers need more than just tools; they need the right frameworks to ensure AI supports, rather than undermines, the customer experience. That means building in guardrails for data privacy, keeping humans in the loop, and ensuring automation reflects a brand's values at every touchpoint."

Small retailers lag behind

The research indicates a growing disparity in AI access and readiness between larger retail chains and smaller businesses. While nearly all respondents (93 per cent) believe AI can help local businesses compete against global enterprises, only 62 per cent of small retailers with fewer than 50 employees share this sentiment. Among these small retailers, 40.9 per cent currently have AI agents deployed compared to 71.4 per cent of mid-sized companies with 100 to 499 employees.

Cost remains the primary obstacle for the smallest retailers, with 73 per cent of micro retailers (1-9 employees) naming financial constraints as the main barrier to AI adoption. The research also found that only 65 per cent of small firms reported strong in-house AI expertise, compared to 78 per cent among all respondents.

Watson pointed out the unintended consequence of this divide: "The irony is AI should help small businesses do more with less, but right now, they're the ones being left behind. For smaller retailers, this isn't just about cutting costs. It's about gaining back time, improving operations, and being able to compete on a more level playing field."

He added, "Vendors and platforms like monday.com have a responsibility to make AI accessible. That means helping small retailers understand where AI can genuinely move the needle, not just automating for automation's sake. Our role at monday.com is to surface the insights that matter, and make it easy for businesses of every size to adopt AI in ways that are practical, purposeful, and impactful."

Sector-specific adoption

The study reveals that different retail categories are prioritising AI in distinct ways. In sectors such as fashion and eCommerce, retailers are leading in the use of AI-powered customer support (63.6 per cent) and marketing automation (54.5 per cent). Food and beverage retailers focus strongly on inventory optimisation (62.1 per cent) and logistics. The luxury retail segment is utilising AI for fraud detection (58.1 per cent) and customer service enhancement (54.8 per cent).

Australian retailers, including those in health and wellness such as Nutrition Warehouse, are increasingly using AI technologies to automate back-end processes, adapt product copy, and generate insights, but are maintaining human oversight at customer touchpoints. Given the regulated nature of certain retail categories, such as health products, retailers remain alert to the risk of AI-generated errors that could impact compliance and damage brand trust.

The findings suggest that as AI capabilities become more embedded, retailers are adjusting their investments to address specific operational challenges, ranging from improving delivery efficiency to enhancing customer trust and data privacy.