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Author: Daniel Wright, Australian Retail and Technology Blogger
Australian retail is changing quickly, and artificial intelligence is becoming one of the biggest forces behind that change. AI is now being used to improve inventory management, understand customer behaviour, personalise shopping, support employees, manage self checkout, improve supply chains and even explore new ways for customers to complete a purchase. The interesting part is that much of this technology is happening behind the scenes. A shopper may not realise that AI helped decide which products should be available in a store, how much stock to order or which products appear first in an online search.
I have noticed that the conversation around retail technology has also changed. A few years ago, it was mostly about online shopping, mobile apps and self service checkouts. Now retailers are looking at how different technologies can work together. AI, cameras, checkout systems, customer data, inventory platforms and payment technology are increasingly becoming part of one connected retail environment.
AI is becoming part of everyday Australian retail
When people hear the words artificial intelligence and retail, they often imagine a chatbot answering customer questions. That is only a small part of the story.
AI can analyse large amounts of information much faster than a person can. In retail, that information might include sales history, product availability, weather patterns, local shopping behaviour, promotions, customer preferences and seasonal demand.
The result can be surprisingly practical.
A retailer might use AI to help answer questions such as:
Which products are likely to sell more next week?
Which stores may run out of a particular product?
Which products should be promoted to a particular customer?
Why did a promotion work well in one location but poorly in another?
Which products are likely to be returned?
Where should stock be moved?
What could a customer be looking for based on their search?
These are not futuristic questions anymore. Australian retailers are already exploring or using AI for many of these tasks.
KPMG’s Australian Retail Outlook has highlighted the growing role of generative AI and analytics in creating more personalised and predictive retail experiences. It also points out something that I think is particularly important. Good data is becoming increasingly important as retailers adopt AI.
That makes sense. AI can be extremely powerful, but it cannot magically fix poor or disconnected information.
The checkout is becoming much smarter
Self checkout has been around in Australia for years, but the technology behind it is becoming more sophisticated.
According to research reported by Inside Retail Australia, around seven in ten Australian shoppers now prefer self service for quick and simple shopping trips. That tells us something important. Self checkout is no longer just an experiment designed to reduce queues or staff workload. For many shoppers, it has become a normal part of the retail experience.
The next stage is connecting self checkout with other technologies.
Instead of having a checkout machine working on its own, retailers can connect cameras, payment systems, artificial intelligence, inventory information and loss prevention technology.
Woolworths provides a useful example. Its Scan Assist technology uses smart cameras at some self service checkouts to monitor the movement of products and identify situations where an item may have been missed or incorrectly scanned. The system can alert customers and nearby staff when something needs to be checked.
Its Picklist Assist technology can also recognise characteristics such as the shape and colour of fresh produce to help shoppers select the right item.
These examples show where retail AI is heading.
The objective is not necessarily to replace people. It is often about making a process quicker and reducing the number of small problems that require human intervention.
Smart trolleys could change the supermarket experience
Another interesting development is the smart shopping trolley.
Coles has previously trialled an AI powered Smart Trolley developed with Instacart. The idea is fairly simple. Instead of putting products into a trolley and then taking everything out again at the checkout, the trolley can help identify products as customers shop.
It can also show the running cost of the basket and allow shoppers to pack items as they go.
I can see why this type of technology could appeal to busy Australian shoppers.
Imagine doing a weekly shop after work. You already know roughly what you need. You do not really want to spend extra time standing in a checkout queue. A smart trolley could potentially let you shop, pack and pay with much less friction.
There is another interesting possibility here.
The trolley could become a digital assistant rather than simply a piece of shopping equipment.
It could potentially remind a customer about items they regularly buy, help them stay within a budget, suggest alternatives when something is unavailable and provide information about products.
That is where AI starts becoming more interesting than simple automation.
Retail AI is also working behind the scenes
The most important use of AI may actually be invisible to customers.
Retail businesses deal with enormous amounts of data every day. They need to decide how much stock to order, where to send it and when to replenish it.
Getting this wrong can create two problems.
A store can have too much stock, which may eventually need to be discounted.
Or it can have too little stock, which means customers cannot buy what they want.
AI can help retailers identify patterns and make better forecasts.
Coles has said that it has been using AI for years for areas such as rostering, replenishment and tailoring product ranges to individual stores. The company has also described the use of AI in automated distribution and fulfilment centres.
Wesfarmers is another interesting example. In 2026, the company discussed work with Microsoft to develop AI agents focused on demand forecasting and inventory management across its retail businesses. Kmart was identified as an early area of focus.
This is the type of AI I believe will have a much bigger impact on retail than many flashy customer facing features.
If AI can help a retailer make better decisions about what products to buy, where to put them and when to replenish them, the benefits can flow through the entire business.
David Jones and the move towards better data
Large Australian retailers have another challenge. Many have been operating for decades, sometimes with different systems added at different times.
You can end up with customer information in one system, inventory data in another, ecommerce information somewhere else and merchandising teams working from spreadsheets.
AI does not work particularly well when the underlying information is fragmented.
David Jones is one example of a retailer working towards a more modern data environment. The business has been working with modern data and analytics capabilities to improve areas such as inventory planning, forecasting and merchandising.
This is an important lesson for smaller retailers too.
There is sometimes a temptation to buy an AI tool immediately because everyone is talking about AI. But the better question is often, “Do we have clean and useful data for AI to work with?”
If the answer is no, improving the underlying systems may be more valuable than immediately adding another AI application.
Personalisation is becoming more advanced
Online retailers have used personalisation for years.
You may have seen messages such as “You may also like” or recommendations based on something you previously purchased.
AI can take this much further.
Instead of simply looking at one previous purchase, an AI system can potentially consider a much broader set of information.
It might consider browsing behaviour, previous purchases, local availability, current promotions, product preferences and the type of shopping journey the customer appears to be on.
The goal is to make the shopping experience feel more relevant.
Flybuys is an interesting example because loyalty programs naturally generate large amounts of customer data. Centralised data platforms and predictive analytics can help businesses understand customer behaviour and create more targeted rewards.
There is a fine line here, though.
Personally, I think Australian retailers need to be careful not to confuse personalisation with excessive tracking. Most shoppers appreciate relevant recommendations. They may feel very differently if they believe a retailer knows too much about them.
Trust will become just as important as technical capability.
Metcash is using AI to support independent retailers
AI is not only being used by the biggest consumer facing retail brands.
Metcash, which supplies independent businesses including IGA supermarkets, has been using AI within its B2B marketplace.
One interesting application is AI powered search.
For an independent store operator, finding the right products is not simply about typing a product name into a search box. Local demand can vary considerably from one area to another.
AI can potentially make search results more relevant by considering factors such as local demographics, purchasing behaviour and other information.
Metcash has also been using AI to help understand marketing performance.
For example, if a promotion performs poorly in one area, the retailer needs to know why. Was the product not available? Was distribution a problem? Was the price wrong? Or did customers simply not want the product?
AI can help identify patterns across large amounts of information much faster than traditional manual analysis.
This is a good example of AI being used as a decision support tool rather than simply a customer chatbot.
Coles is taking a major step into workplace AI
Coles announced a major collaboration with OpenAI in 2025 and began rolling out ChatGPT Enterprise to parts of its corporate workforce.
The company has described potential uses including research, administrative tasks, data insights, compliance support and idea generation.
It has also said that AI is being explored for customer experiences and has been used in areas such as supply chain optimisation and computer vision.
What interests me most about this is the employee side of AI.
Retail has thousands of employees doing repetitive tasks. AI can potentially help people find information, prepare documents, analyse data and complete routine work more quickly.
That could give employees more time for the parts of retail that actually require human interaction.
And I think this matters because retail should not become completely automated.
There are situations where I would much rather speak to a helpful person than a screen.
AI shopping assistants could change how Australians shop online
Perhaps the biggest change is still coming.
Major Australian retailers including Woolworths, Coles and Wesfarmers have been exploring AI shopping assistants and agentic commerce.
The idea is different from a normal chatbot.
Instead of asking an AI a question and then doing everything yourself, an AI assistant could potentially help plan a meal, identify products, compare options and prepare a shopping basket.
ABC News has reported on plans involving Woolworths and Google’s AI technology that could allow shoppers to create shopping baskets based on things such as recipes, preferences, promotions and local product availability.
This could completely change the traditional ecommerce journey.
Today, I might search for a product, visit several pages, compare prices and add something to my cart.
In the future, I might simply tell an AI assistant what I need.
“I am having six people over for dinner on Saturday. Help me buy everything I need, keep the total reasonable and use products available at my local store.”
The AI could potentially do much of the research.
That is convenient, but it also creates a new challenge for retailers.
If AI becomes the middle layer between customers and stores, retailers will need to make sure their products, prices, reviews, stock information and brand information are easy for AI systems to understand.
This could make structured product information and clean ecommerce data even more important.
Interactive screens are changing physical stores
AI is also helping physical retail stores become more interactive.
Touchscreens, digital displays, connected devices and voice technology can provide shoppers with additional product information without requiring a staff member to be available immediately.
Imagine walking into an electronics store and using a screen to compare two televisions.
The system could explain the differences in simple language, show available stock and perhaps recommend a model based on what you tell it you need.
In a supermarket, a digital display could potentially show recipe ideas based on products available in that particular store.
These experiences can make a physical shop feel more connected to the online experience.
The interactive display market itself is expected to continue growing strongly, although exact forecasts vary between research companies.
Cameras are becoming more intelligent
Computer vision is another important part of retail technology.
Retailers can use cameras to understand what is happening inside a store without necessarily requiring someone to watch every camera feed manually.
AI can potentially identify empty shelves, unusual activity, queues or checkout issues.
Woolworths already uses smart camera technology in several checkout and shopping applications. Its privacy information states that technologies such as Scan Assist and Scan&Go are designed with measures such as face blurring.
This is a useful reminder that not every retail camera using AI is facial recognition.
There is a major difference between a system recognising a banana and a system identifying a person.
That distinction matters because biometric information is much more sensitive.
Facial recognition is creating a new privacy debate
This is probably one of the most controversial areas of retail technology in Australia.
Coles and Woolworths have confirmed controlled testing of facial recognition technology, although the circumstances and scope of those tests have been limited.
Coles has described its work as a small proof of concept that did not involve collecting or retaining personal customer information. Woolworths has also discussed testing, including a trial at its New Zealand office.
The motivation is understandable.
Australian retailers are dealing with theft, aggression and safety concerns. Technology that can potentially identify people associated with serious incidents may appear attractive from a security perspective.
But there is another side.
A customer walking into a supermarket may not expect their face to become part of a biometric identification system.
The Office of the Australian Information Commissioner has recently updated its guidance on facial recognition in retail and has emphasised the high privacy bar that applies when organisations collect sensitive biometric information.
The Bunnings case has also become an important reference point in Australia’s debate around facial recognition.
So I think this is one area where retailers need to move very carefully.
The fact that technology can do something does not automatically mean that it should be used everywhere.
Biometric payments could be the next step
Another interesting development is biometric payment technology.
Payment companies are beginning to explore systems that allow customers to authenticate payments using facial recognition or palm based technology.
Verifone has introduced technology in Australia that supports biometric payment concepts, including facial and palm recognition.
The idea is simple.
Instead of pulling out a card or phone, a customer could potentially authenticate themselves using a biometric method and complete a transaction.
For some people, this may sound incredibly convenient.
For others, it may sound like something they would never want to use.
I suspect both groups will continue to exist.
Contactless payments also faced questions when they first became common. Today, tapping a card or phone is completely normal for most Australians.
Biometric payments may follow a similar path, but privacy concerns are much more significant because biometric information is fundamentally different from a replaceable payment card.
The biggest challenge may not be AI itself
One thing I keep coming back to when looking at retail AI is that the technology is only part of the story.
A retailer can have an impressive AI model, but if its product information is wrong, inventory records are outdated or customer data is poorly organised, the results may not be very useful.
This is why modern data infrastructure matters so much.
Retailers need reliable information about products, customers, stock, prices and transactions.
They also need systems that can communicate with each other.
Only then can AI start making useful decisions across the business.
KPMG has made a similar point in its Australian Retail Outlook, highlighting data quality as an important foundation for successful AI adoption.
AI will probably become less visible
I think the most successful retail AI will eventually become almost invisible.
Customers may not know that AI helped decide which products were placed on a shelf.
They may not know that an algorithm predicted demand for their suburb.
They may not realise that AI helped personalise their search results.
They may simply notice that the product they wanted was available, the checkout was quick and the online shopping experience felt strangely relevant.
That is probably the real opportunity.
Retailers do not necessarily need to make AI the centre of the customer experience. They can use it quietly in the background to remove friction and make better decisions.
At the same time, Australian retailers will need to keep the human side of shopping in mind.
People still want help when they need it. They still want to see products in person. They still appreciate friendly staff. And increasingly, they want to know what is happening with their personal data.
The retailers that get this balance right could be in a strong position.
AI is clearly becoming part of Australian retail, but I do not think the future is simply about replacing people with machines. The more interesting future is one where AI handles the repetitive work, technology connects the different parts of a retail business, and people remain available for the moments where human judgement and personal interaction matter most.
For shoppers, many of these changes may arrive quietly. One day we may simply realise that the way we shop has changed without us really noticing when it happened.
Retailwire