The burgeoning landscape of artificial intelligence (AI) is rapidly transforming the retail industry, presenting both unprecedented opportunities and significant challenges. As customers increasingly gravitate towards AI-powered chatbots and automated assistants to guide their purchasing decisions, retailers are confronting a critical issue: the potential loss of control over how their products are presented, marketed, and bundled. This strategic concern is prompting numerous large retail chains to proactively develop or invest in their own AI-driven shopping tools, rather than exclusively depending on external, third-party platforms. The primary motivation behind this shift is not merely to embrace technological novelty, but rather to maintain a direct and influential relationship with their customer base as the shopping experience becomes increasingly automated.

Leading retailers, including home improvement giant Lowe’s, grocery chain Kroger, and pizza purveyor Papa Johns, are at the forefront of this experimental phase. They are actively testing AI agents designed to assist shoppers with product searches, provide customer support, and streamline the order placement process. A key enabler in this transition is Google, which offers retailers the infrastructure to deploy sophisticated AI agents directly within their proprietary apps and websites. This strategic partnership allows retailers to keep customer interactions within their own digital ecosystem, preventing redirection to external platforms and thus safeguarding their brand identity and customer data.

For grocery behemoths like Kroger, the integration of AI into the shopping journey is not a question of 'if,' but 'how quickly.' Yael Cosset, Kroger’s chief digital officer and executive vice president, emphasizes the urgency, stating that failing to deeply engage with AI agents now could create a significant competitive disadvantage. Kroger is currently piloting an AI shopping agent embedded within its mobile application. This advanced agent is capable of comparing various items, facilitating purchases, and dynamically tailoring suggestions based on individual customer habits and specific needs, such as time constraints or dietary plans. Crucially, it leverages Kroger's extensive existing data, encompassing price sensitivity and brand preferences, to ensure that these personalized decisions remain within the company's secure systems.

This approach highlights a broader tension prevalent in the retail sector. While integrating products directly into major AI chatbots from companies like OpenAI or Microsoft (as seen with Walmart's collaboration with ChatGPT) can dramatically expand market reach, it often comes at a cost. Retailers risk eroding customer loyalty, missing opportunities for add-on sales, and seeing a reduction in advertising revenue. When a third-party entity controls the interface through which products are discovered and purchased, retailers lose significant influence over how choices are framed and presented to the consumer. This inherent loss of control is a primary reason for the cautious stance many retailers adopt regarding direct sales through external AI tools.

The appeal of operating proprietary AI agents is unequivocally about control. Lauren Wiener, a global leader of marketing and customer growth at Boston Consulting Group, observes a distinct market shift, with a growing number of retailers actively investing in their own capabilities rather than solely relying on external providers. However, the development and ongoing maintenance of these advanced AI systems present their own set of challenges. The foundational AI models evolve at an extraordinary pace, meaning that solutions effective today might require substantial overhauling in a matter of weeks.

This rapid technological evolution is directly influencing how retailers strategize their vendor relationships. Lowe’s, for instance, utilizes Google’s shopping agent to power its virtual assistant, Mylow, reporting a more than doubling of conversion rates when customers engage with Mylow online. Yet, Lowe's deliberately avoids reliance on a single provider. Seemantini Godbole, Lowe’s chief digital and information officer, explains that the inherent volatility of AI technology—where newly built tech can become outdated in mere weeks—necessitates a diversified vendor approach, including partnerships with companies like OpenAI. Kroger mirrors this strategy, collaborating with multiple entities such as Instacart alongside Google to bolster its AI agent initiatives, underscoring the high priority placed on these developments.

Conversely, some retailers, like Papa Johns, are adopting a more pragmatic stance by focusing on the application of existing AI agents rather than embarking on complex in-house development. Papa Johns is currently experimenting with Google’s food ordering agent to manage tasks such as estimating the number of pizzas required for a group based on a customer-uploaded photo. Kevin Vasconi, Papa Johns’ chief digital and technology officer, articulates this philosophy: