Harnessing data and Generative AI to shape the next-generation customer experience in retail

The retail sector is at an inflection point. Changing consumer expectations, market uncertainty, and rapid technological advances are reshaping what it means to deliver exceptional customer experience. For luxury and premium retailers in particular, product quality alone is no longer the primary differentiator. Today’s customers seek curated, seamless, and distinctive experiences—both physical and digital. As outlined in the report Retail reimagined: Creating tailored customer experiences using data-driven insights, the combination of high-quality data and GenAI is enabling retailers to reimagine how they engage, serve, and retain their most valuable customers.

A sector facing new pressures—and new possibilities

The luxury market has entered a more subdued phase. While affluent customers remain loyal, aspirational spending has softened. At the same time, digital expectations have accelerated dramatically. Deloitte’s ConsumerSignals research shows that 69% of global consumers want enhanced ultra-fast streaming capabilities on their smartphones, while more than 60% expect their devices to support enriched in-store shopping journeys. This includes instant item location, stock visibility, and real-time assistance.

These shifts highlight a broader transformation: retail experiences must be personal, frictionless, and data-driven—or risk irrelevance.

GenAI moves from experimentation to enterprise value

GenAI is no longer a future concept. It is rapidly becoming a critical enabler of personalisation, content creation, automation, and customer insight. According to the research, 98% of retailers plan to invest in GenAI infrastructure within 18 months, although 77% plan to invest under US$5 million, indicating a careful, measured approach.

Yet early adopters are already realising tangible benefits.

Bata: Using AI to enhance operations and customer engagement 

Bata continues its legacy of innovation through a series of AI-enabled initiatives:

• AI-driven merchandising and replenishment ensures that the right products reach the right stores, reducing waste and improving availability.
• AI-augmented chatbots support customers with queries, sizing, and order updates, strengthening service consistency.
• “Voice of the store” analytics convert store-manager messages into data dashboards, improving transparency across operations.
• GenAI-powered customer segmentation has delivered a 50% increase in conversion rates, demonstrating the commercial value of precision-targeted marketing.

These efforts exemplify how GenAI supports efficiency while enhancing the customer experience.

Majid Al Futtaim in Dubai: Redefining modern luxury through data and AI

Majid Al Futtaim’s Lifestyle division uses data analytics, machine learning, and GenAI to create richer, more intuitive journeys:

• Advanced forecasting tools have driven a 25% reduction in inventory alongside a 12% increase in revenue.
• GenAI-generated content delivers tailored, relevant messaging.
• Machine-learning-based recommendations support higher online engagement.
• AR tools on beauty and home platforms drive approximately 3% of online revenue, allowing shoppers to try on products or visualise items at home.

Critically, the organisation places strong focus on its most valuable customers. The top 2% of shoppers generate 27% of total revenue, supported by personalised gifting, curated events, and tailored campaigns.  

Hyperpersonalisation as the new hallmark of luxury

Across the global luxury sector, GenAI is enabling new levels of personalisation. Zegna’s digital customisation ecosystem, Prada’s real-time personalisation powered by Adobe, and GenAI-driven campaign development at Moncler and Valentino all demonstrate how leading brands are using AI to deepen engagement and streamline creative processes.

Consumers increasingly expect experiences that feel bespoke and relevant—regardless of channel. GenAI makes such experiences achievable at scale.

Trust: The decisive factor in successful AI adoption

Despite the benefits, trust remains a significant barrier. Deloitte’s research reveals that eight in ten consumers have little trust in retailers’ AI use. Furthermore, customer trust drops 144% when they become aware that a brand is using AI. Yet the opportunity is substantial: trusted organisations outperform peers by up to four times, and trusted customers are 88% more likely to buy again.

To build trust, retailers must design and deploy AI around four core principles:

1. Human connection – AI should respond with empathetic, context-appropriate language.
2. Transparency – Retailers must articulate how and why AI is used.
3. Capability – Employees should be trained and empowered to use AI effectively.
4. Reliability – AI systems should be predictable, honest about limitations, and consistently deliver on expectations.

Trust is earned, not assumed—and retailers who embrace responsible AI design will benefit most.

Data quality remains the cornerstone of GenAI success

GenAI is only as strong as the data that fuels it. Many retailers hold vast quantities of unstructured data—comments, images, social posts, notes—that are inconsistent, difficult to interpret, and often contain sensitive information. Without rigorous governance, classification, and cleansing, GenAI outputs risk being inaccurate or biased.

Retailers that invest in creating clear, structured, privacy-safe data foundations will unlock far greater value—from sentiment-based product forecasting to AI-assisted styling and sustainability reporting.  

Balancing innovation with governance

GenAI creates new risks: model hallucinations, algorithmic bias, intellectual property concerns, and cyber vulnerabilities. Deloitte’s Trustworthy AI™ Framework provides a blueprint for assessing and mitigating these risks across governance, security, ethics, and data integrity. A multidisciplinary approach ensures AI develops responsibly and sustainably. 

Get in touch: How Deloitte can help

The next era of retail will be shaped by those who balance innovation with responsibility.  

At Deloitte, we help retailers:

• Develop customer-centric GenAI and personalisation strategies 

• Build secure, high-quality data foundations

• Implement trusted AI governance frameworks 

• Optimise customer journeys across digital and physical channels

• Deploy predictive analytics, digital twins, and intelligent automation 

• Strengthen customer trust and accelerate commercial growth

Whether you are exploring GenAI for the first time or scaling existing capabilities, our specialists can guide you through the transformation—helping you deliver experiences that are distinctive, data-driven, and future-ready.

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