The UK retail industry is no stranger to adverse conditions. The last decade has seen the decline of the high street, rising operational costs, supply chain uncertainty and the need to strike the balance between competitive but profitable pricing.
Heading into 2026, retailers must look to prepare for the next sector battleground — achieving operational brilliance, with less resources. AI is a key tool in the modern retailer’s arsenal to overcome this challenge. When deployed effectively, AI tools enable retailers to scale their operations with fewer resources. This means they can free up staff to focus on more customer-facing work and provide the data insights needed for a more accurate, predictive understanding of market conditions that influence supply chains and inventory planning.
To be prepared for the challenges ahead, retailers must prioritise strategic investment in AI tools or risk being ambushed and losing sales opportunities and loyal customers to competitors.
Scaling operations with less resources
This year alone, the British Retail Consortium reported that around 97,000 retail jobs were cut, leaving many retailers struggling to maintain smooth internal operations and meet rising consumer expectations, with fewer staff to support them. This is where AI comes in to close the gap between resource and expectation, enabling retailers to successfully scale operations.
AI offers a powerful way to boost efficiency and business performance, even with limited resources. Retail is inherently an admin heavy industry, with tracking inventory, customer orders, managing stock levels and liaising with suppliers all contributing to this significant time drain. In fact, a recent study indicated the average retailer dedicates almost 300 hours a year to routine admin tasks, with 66% of the retailers surveyed saying their volume of admin is only increasing, citing reasons such as growing inventories and the pace of order processing. By automating these routine administrative tasks, employees can devote more time to creative, customer-facing work that requires a human touch, and ultimately fosters long-term customer loyalty.
Beyond internal data and admin tasks, AI agents also have huge potential in customer-facing operations, with it being predicted that they’ll handle up to 80% of customer service queries by 2029. When trained on a retailer’s own data, these agents can autonomously manage first-line queries and provide informed product recommendations, freeing human operators to focus on more complex issues.
Shifting from a reactive, to predictive approach
Retailers’ long-term resilience and operational success largely depend on a proactive, informed approach to shifting market conditions, rather than reactive, last-minute strategising.
The outdated planning tools, and complex spreadsheets many retailers rely on and only update every few weeks to months, are just not going to keep pace with the tumultuous nature of today’s market conditions and evolving consumer trends. Real-time insights are key.
AI powered forecasting reimagines this process by drawing on real-time consumer data to forecast demand with up to 50% greater accuracy. This foresight enables retailers to plan promotions, manage stock levels and prepare for shifts in demand before they even happen.
Crucially, AI powers scenario-based planning. Rather than betting on a single forecast, retailers can run multiple real-time scenarios. This allows them to stress-test strategies against potential supply shocks or competitor activity, enabling proactive planning to ensure revenue opportunities and cost savings aren’t overlooked. For example, by leveraging AI planning, a leading UK multi-channel retailer optimised pricing markdowns to save a total of £2.4 million.
The importance of reimagining workflows
Before getting swept up in the operational enhancements that AI promises and the array of tools on offer, retailers must get their AI and data strategy in order. AI isn’t a plaster to be stuck on top of outdated, legacy systems, it requires rethinking operations from the ground up.
At the core of operational excellence is an efficient, fit-for-purpose tech stack. By first ensuring that data is accurate, and of high quality, retailers can look to deploy AI systems, including agents, to automate decisions and eliminate manual bottlenecks. AI frees up teams to focus on strategy, to maintain a competitive edge in the crowded retail landscape and drive long-term growth.
Retailers must act now to prepare for the industry’s next challenge
The battle to achieve operational brilliance, both internally and in customer facing operations, is only beginning. Prioritising a modern data and AI strategy will be essential for reimagining operations, as a competitive necessity.
Brands and retailers that act now will be the winners of this battle, and can expect to enjoy stronger business growth, more proactive and informed decision-making, and the ability to both stay ahead of evolving consumer expectations and expand their existing customer base.
Tom Summerfield
Tom Summerfield is Director of Revenue at UiPath.
