AI revolutionises Indian retail as investments set to reach US$22 billion by 2027: Deloitte India

AI-driven transformation and evolving consumer aspirations are defining the next chapter of Indian retail. Between 2020 and 2024, India’s retail and e-commerce sectors witnessed significant investments in AI to enhance customer experiences, optimise operations and drive sales growth.

Aligning with this vision, Deloitte India, in association with the Retail Association of India, has orchestrated the latest report, “AI in Retail for the Agentic Era: Aspiration to action”, demonstrating how the power of AI is now a strategic backbone moving beyond pilot experiments to full-scale adoption across the retail value chain. Indian retailers are using agentic AI and GenAI to personalise customer journeys, optimise supply chains, redesign products and create seamless omnichannel experiences.

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Consumer behaviour is in flux, led by Gen Z and millennials, who expect frictionless engagement across digital and physical spaces. Rising affluence continues to push demand for premium and global-quality products, setting new standards for Indian brands. The shift to experience-driven and aspiration-led shopping is at the centre of this evolution, with technology powering deeper, more personalised connections between brands and customers. How does AI help?

• AI in retail has evolved from statistical analysis for campaigns and product launches to advanced machine learning for churn prediction, customer segmentation and demand forecasting. • Deep learning applications support visual recognition and virtual try-ons, enhancing customer interaction. • The emergence of GenAI and agentic AI is driving a shift towards hyper-personalised content, product design, and automated, agent-led process management. These advancements improve customer experience and operational efficiency, and enable data-driven decision-making across retail functions.

The report highlights two strategic frameworks driving successful AI adoption in the retail sector. The Choice Framework helps retailers evaluate and align their AI projects with core business objectives by factoring in feasibility, technology readiness, capacity and overall impact. This ensures investments are made in solutions that deliver tangible value.

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The Prioritisation Framework enables businesses with existing AI initiatives to rank their use cases by impact, ease of implementation, and uniqueness of the AI solution. This helps focus on activities such as hyper-personalised lookbooks, which offer high differentiation versus standard analytics.

Moving from a pilot phase to scaled execution requires action on five imperatives: building AI-ready infrastructure such as advanced data platforms and cloud integration; driving collaboration between technology, product and business teams; ensuring responsible, transparent AI practices; implementing greater personalisation and automation; and adopting a test-and-learn mindset to continuously improve offerings. This enables retailers to anticipate demand, boost customer engagement, enhance operational efficiency and deliver immersive, future-ready consumer experiences.

The report offers a forward-looking lens into how AI is redefining the rules of engagement, operations and innovation across the retail value chain. The use cases outlined here are aspirational yet actionable, from intelligent agents that autonomously manage customer journeys to AI-powered platforms that accelerate product design and supply chain responsiveness.

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