AI Drives Clicks, But Humans Win Customers: The New Retail Reality

A year ago, the retail industry was in a panic, scrambling to retool for the AI revolution while doubting whether such staggering investments would ever pay off. Yes, AI was powerfully efficient on the expense and logistics side, but would it drive enough retail revenue growth to justify the plunge?

Today, the crowd of shoppers embracing AI-driven "conversational commerce" is growing fast, but so far it's mostly a case of people bypassing traditional search (SEO). According to a recent report by Salesforce.com, the share of consumers who found products through SEO in the last year fell by 15%, while those who used AI tools or apps grew by 38%.

No retail exec should doubt that AI is a "do or die" imperative for consumer-facing companies, both in marketing and as an in-house tool for managing customer interactions. A report by McKinsey & Co. predicted that by 2028, AI-powered search will play a key role in generating annual revenues of about $750 billion.

For now, a solid majority of shoppers rate "Conversational Commerce" as a useful new tool. But what matters more to consumers than anything else is, broadly speaking, the human touch—that timeless element that has always been essential for building strong retail brands with loyal followings.

That's one of the conclusions reached by Five9, an e-commerce consulting firm that paired with Hanover Research to poll 3,000 consumers and 600 senior customer experience execs across the U.S., U.K., and Germany. Eight out of 10 consumers were willing to use AI-powered customer service, but two-thirds said they still prefer speaking with a human.

"Consumers expect transparency, choice, and seamless transitions when human assistance is needed," Five9 reported. "Phone remains the most preferred customer service channel."

Researchers also find that consumers have major trust issues with the technology they love. Shoppers are hyper-alert to all sorts of real and feared digital manipulations. For example, to win new customers and see revenue growth, merchants will have to be more forthcoming for the 70% of consumers who said it was "very or extremely important" to know when they are interacting with an AI agent.

As technology makes the world ever more frictionless, bad customer service becomes more obvious, less forgivable, and apparently more common. More than half of consumers in a recent survey conducted for Genesys said they would rather do anything else than contact customer service.

According to Five9's study, a majority of consumers said they were more likely to trust AI "when offered a clear path to a live agent," versus only a quarter who would when no human option is available.

For retailers to successfully navigate all these crosscurrents, they will have to demonstrate to customers that at the end of their journey there is still going to be a fellow human able to answer their questions and solve their problems. It truly is the combination of humans and technology that win.

So, the answer to the question of whether AI drives revenue growth? It depends on how well any particular retailer or brand has leveraged the power of AI without losing the human touch.