14 Use Cases on How Australian Retailers Are Adopting AI to Stay Competitive

Picture this: a customer walks into a Woolworths store, picks up items without scanning them, and walks out while their payment is automatically processed. Meanwhile, at Coles, smart trolleys guide shoppers through personalized recommendations while tracking their spending in real-time. Sounds interesting? Well, this is not futuristic fiction anymore. It is the reality of artificial intelligence in retail in Australia today.

Recent data from the National AI Centre (NAIC)’s AI adoption in Australian businesses for the 2025 Q1 report reveals that businesses across industries are currently adopting AI. But here’s the kicker: retail is leading the charge, outpacing every other industry with over 45% of SMEs actively adopting AI.

Rob Marchiori, Country Manager of Cognizant Australia, states: “With 55% of consumer transactions expected to be influenced by AI by 2030, businesses here have a unique opportunity to rethink how they engage with customers.

However, Australian retailers adopting AI face unprecedented challenges, from intense competition and changing consumer expectations to supply chain disruptions and rising operational costs. But worry not. This blog is here to help.

In this comprehensive blog, we will explore 14 practical and innovative ways artificial intelligence in retail in Australia is reshaping everything from customer experiences to supply chain optimization. We will also discuss the practical ways to overcome the potential challenges that come in the way of AI adoption. So, ready to discover how AI is elevating digital transformation in the retail sector in Australia? Let’s dive in now:

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14 Ways Aussie Retailers Are Using AI to Change the Game

Australian retailers are adopting AI to transform the entire retail landscape. They use AI to redefine how they interact with customers, manage inventory, drive profitability, and do a lot more. We’re talking about AI use cases in retail that are already ringing up sales and making customers happier. From hyper-personalized shopping experiences to smart logistics solutions, AI applications are reshaping the future of retail in Australia.

Australian retailers are clear about the role AI is going to ‌play in supporting key aspects of their business, from staff enablement, to process and supplier efficiency, customer engagement and loyalty.

Timothy Waters
Regional Vice President, Retail,
Salesforce Australia and New Zealand

With that said, let’s explore the top 14 applications and benefits of AI for retail businesses in Australia.

1. Hyper-Personalized Customer Journeys

Forget blasting everyone with the same generic ad. The real magic is in making each customer’s journey feel unique and personalized. Here, AI does the trick that plays as a detective, watching how you browse, what you’ve bought, and even how long you look at a pair of shoes. Based on this insight, AI can predict what you’ll probably want and then give personalized recommendations.

How it Works: It’s like having a personal shopper for every single person. The system takes all those little clues and pieces them together to show you products you’ll actually care about, sends you deals that make sense for you, and even tailors the website/app to your tastes.

The Payoff: It’s simple: your customers buy more when they feel understood. According to Salesforce, 25% consumers are already using AI to discover products, while 64% are eager to adopt AI tools for enhanced shopping experiences, including faster service, smarter loyalty rewards, and more accurate, personalized recommendations.

Real World Example: A classic brand, Woolies, uses AI to enhance its customers’ shopping experiences. Their AI is constantly learning. It knows you prefer organic produce, remembers you’re trying to eat healthier, and understands you usually shop for a family of four. Every interaction makes the next one better.

2. 24/7 Customer Support with AI Chatbots

We’ve all been there: stuck on a website at 10 PM with a simple question and no one to answer it. Conversational AI in retail is fixing that, with chatbots that don’t just handle thousands of DIY questions every single day but also connect with the human agent when needed. No runaround, no frustration.

How it Works: These new AI agents in retail are smart. They can track your order, process a return, help you figure out which product is right for you, and even suggest alternatives if something’s out of stock. What’s more? When someone asks a complex question about structural engineering or electrical work, the AI immediately connects them with a human expert.

The Payoff: The benefits are huge. You can cut customer service costs by roughly 30% while dramatically improving response times. Customers get instant answers to simple questions, and staff focus on solving complex problems that actually need human expertise.

Real World Example: When online shopping boomed, Woolworths brought in their chatbot, “Olive,” to handle the flood of questions. The company uses AI chatbots to assist customers with everything from locating products in stores to providing delivery updates. It was a smart move that kept customers happy and their support lines clear.

Also Read: Cost to Build a Retail Delivery App Like Woolworths

3. Intelligent Demand Forecasting

Guessing how much stock you’ll need for a long weekend is a recipe for disaster. You either end up with disappointed customers staring at empty shelves or a pile of unsold stuff accumulating dust. There is no place for guesswork in retail. AI in demand forecasting pretty much kills that guesswork.

How it Works: Using AI for demand prediction is way more than just looking at last year’s sales. AI models chew on everything, including upcoming holidays, the weather forecast, what’s trending on TikTok, and beyond, to give you a scarily accurate prediction of what your consumers will want to buy.

The Payoff: You order the right amount of stuff. Less waste, fewer missed sales. It’s one of the cleanest ways to directly pad your bottom line. This kind of intelligent forecasting helps Aussie retailers using AI stay ahead of customer demand instead of constantly playing catch-up.

Real World Example: Coles built a demand forecasting system that considers over 100 different variables. We’re talking weather patterns, school holidays, sports schedules, economic indicators, and even social media trends. They’ve been leaning on AI to predict demand, which means more fresh produce on the shelves and less of it in the bin.

Their AI learned that Melburnians buy more coffee when the Demons are playing, that Brisbane stores need extra sunscreen during Queensland school holidays, and that everyone stocks up on comfort food when interest rates go up.

Also Read: How Much Does it Cost to Build a Grocery App like Coles?

4. AI-Optimized Inventory Management

A disorganized stockroom isn’t just messy; it’s a place where your money goes to die. AI brings a dose of sanity to inventory management. This is the nuts and bolts of AI for retail automation in Australia.

How it Works: AI keeps a constant, digital eye on your stock levels. When you’re running low on a bestseller, it can automatically place a new order. It can even nudge you about that weird batch of novelty socks that haven’t sold in months, suggesting it’s time for a sale.

The Payoff: You’re not tying up cash in stuff that doesn’t sell, and your most popular items are always ready for purchase. It just makes your whole operation run smoother.

Real World Example: You might not see it, but behind the scenes, many big Aussie retailers like Coles, Woolworths, Bunnings, and Wesfarmers are heavily investing in AI to run their warehouse systems, making sure the journey from the truck to your shopping cart is as efficient as possible.

For instance, Bunnings Warehouse, a household name in DIY and home improvement, uses AI to ensure that they don’t run out of popular items like outdoor furniture during peak season while avoiding surplus items that are not in high demand.

5. Dynamic and Competitive Pricing Strategies

Setting the right price is a tightrope walk. Too high, you scare customers away. Too low, you’re not making any money. Dynamic pricing lets AI handle the balancing act.

How it Works: Think of it as a stockbroker for your products. Algorithms are constantly scanning what your competitors are doing, how much demand there is, and adjusting your prices on the fly to hit that sweet spot.

The Payoff: Retailers use these tools to automatically price-match and stay on top in a market where prices can change by the hour. You stay competitive without having a team to manually change prices all day. It helps you squeeze the most profit out of every single item.

Real World Example: JB Hi-Fi, one of Australia’s leading electronics and entertainment retailers, runs one of Australia’s most sophisticated pricing AI systems. Their algorithms monitor thousands of competitor prices every single hour across electronics, gaming, and entertainment products.  For example, when Harvey Norman drops the price on a popular TV, JB’s system knows within minutes and automatically adjusts its pricing to stay competitive.

6. Streamlined Supply Chain and Logistics

That last stretch of delivery, from the warehouse to a customer’s front door, is a logistical nightmare. AI is like a GPS on steroids for your entire supply chain. The effect of AI in the Australian retail industry is crystal clear here.

How it Works: AI in supply chain optimization finds the absolute fastest delivery routes by looking at live traffic, weather, and more. Inside the warehouse, it can even tell workers the quickest path to grab all the items for an order.

The Payoff: You save a ton on fuel and delivery time. Customers get their stuff faster, which makes them incredibly happy. Last financial year, Coles reported $327 million in cost savings driven by machine learning and automation, according to their latest earnings report. That’s not pocket change; that’s serious money that flows directly to the bottom line.

Real World Example: An Australian freight company like Toll Group doesn’t just move boxes; they move data. They use AI to make sense of it all and optimize their massive logistics network, which pretty much every retailer in the country relies on.

7. AI-Powered Marketing and Ad Campaigns

That blinking cursor on a blank page is the foe of every marketing team. But AI in marketing is like having a creative partner who never runs out of ideas. Generative AI in retail in Australia is creating personalized content at scale. Instead of one-size-fits-all posts, brands can create variations that resonate with different audience segments.

How it Works: These tools can write surprisingly good product descriptions, punchy social media posts, personalized emails, and even create captivating videos in a snap. They can also look at what’s working and what’s not, and suggest how to make your ads better.

The Payoff: You can create more, better, and more personalized marketing content than ever before. It helps you get more bang for your advertising buck.

Real World Example: Furniture brand Freedom uses AI to power its marketing campaigns, personalizing ads for different customer segments based on shopping history and preferences. This means when customers search for “blue sofa,” it doesn’t just show you any old sofa; it shows the one their users are most likely to fall in love with.

8. Enhancing the In-Store Experience

Reports of the death of brick-and-mortar have been greatly exaggerated. It’s not dying; it’s evolving. AI is giving physical stores a digital upgrade. Walking into a Coles or Woolworths today feels different than it did five years ago. Sure, the layout looks similar, but underneath the surface, these stores are becoming digitally smart.

How it Works: We’re talking about smart mirrors that let you “try on” clothes without getting unchanged, or cameras that analyze how people move through the store so you can put your best products in the hottest spots. Retail giants like Amazon and Coles are also trialing smart carts with screens bolted on that completely change the shopping experience. These aren’t just shopping carts;  they’re sophisticated AI systems on wheels.

The Payoff: It makes shopping in a real store fun and interesting again. It gives users a reason to get off their couch and come in.

Real World Example: You can find a number of high-end fashion stores in Sydney and Melbourne playing with this tech, offering a bit of futuristic flair to the age-old act of shopping. For instance, David Jones uses AI to offer a smarter in-store experience. Customers can use interactive displays to get tailored product recommendations based on their preferences and previous shopping behavior.

9. Proactive Fraud Detection and Prevention

Fraud is a massive, costly headache. Instead of just cleaning up the mess after it happens, AI acts like a digital bouncer, stopping troublemakers at the door. It’s a must-have for any artificial intelligence in Aussie retail store.

How it Works: Machine learning is brilliant at spotting weirdness. It looks at thousands of transactions a second and can flag an order that just feels off. ML algorithms analyzes over 1,000 variables per transaction. It includes typing patterns, device characteristics, location data, purchase behavior, and countless other subtle signals that humans would never notice.

The Payoff: You lose less money to scammers, which is a direct win. Plus, your legitimate customers feel safer shopping with you. This kind of protection is crucial for Australian retailers as online shopping continues to grow.

Real World Example: Westpac’s SaferPay system protects millions of Australian retail transactions every day using AI.

Also Read: AI in Cybersecurity: Automating Enterprise Security 

10. Smarter Workforce Management

Ever walked into a store and there are either no staff to be found, or three of them standing around with nothing to do? AI is fixing that by making staff scheduling way smarter.

How it Works: It looks at past sales data and foot traffic to predict when you’re going to get slammed and when it’ll be dead. Then it helps you build a staff roster that perfectly matches the flow of customers.

The Payoff: You’re not wasting money paying staff to stand around, and your customers always have someone to help them during the busy times. It’s a win-win.

Real World Example: Woolworths Group uses AI to manage its thousands of employees, making sure they have the right staff in the right place at the right time. That’s how retail AI Australia making a real-world impact.

11.  Sustainability and Waste Reduction

Today’s shoppers want to buy from brands that care about the planet. AI gives you the tools to be more sustainable and, it turns out, more profitable. Most Aussie supermarkets now use some form of green AI system to manage markdowns. That sad-looking but perfectly good bag of lettuce gets sold at a discount instead of being tossed.

How it Works: In grocery stores, AI is a superhero for reducing food waste. Its sharp demand forecasts mean stores order just the right amount of fresh stuff. It can also manage dynamic markdowns, automatically discounting items as they near their expiry date.

The Payoff: You throw less stuff out, which is great for the planet and your wallet. It also gives you a fantastic story to tell your customers.

Real World Example: Woolworths implemented AI systems in their fresh food departments that monitor product quality and predict optimal markdown timing to minimize waste.

12.  Trend Forecasting & Data-Driven Product Development

What’s the next big thing in fashion? What feature do people wish your product had? Instead of guessing, you can ask AI. It listens to the entire internet to find out.

How it Works: AI tools can scan millions of social media posts, blogs, and customer reviews to pick up on emerging trends and shifts in what users want.

The Payoff: You can confidently develop and stock products that you have data-backed evidence customers will actually buy. It takes a huge amount of risk out of the equation.

Real World Example: Online fashion giants like THE ICONIC don’t just follow trends; their AI in retail analytics helps them anticipate them, keeping their virtual shelves stocked with the next must-have item.

13. Visual Search and Product Discovery

You see someone on the street with the perfect bag, snap a pic, and the retailer’s app tells you exactly which one it is and if it’s in stock. That’s visual search in action.

How it Works: You feed the AI a picture, and it uses image recognition to find that exact product or things that look very similar in the store’s catalogue.

The Payoff: It’s one of the most intuitive ways to shop. It removes all the friction of trying to describe something you saw, making it dead simple for users to go from inspiration to purchase. This is one of the coolest AI in retail examples.

Real World Example: The Iconic allows shoppers to use visual search to find products similar to ones they upload, enhancing product discovery and simplifying the purchasing process.

14. Voice Commerce and Smart Shopping

With smart speakers in so many homes, just asking for what you want is the new way to shop. Retailers are getting their businesses ready for voice commands. The AI-driven voice technology removes friction from repeat purchases; customers can reorder staples without opening apps or websites.

How it Works: AI is what allows Alexa or Google Assistant to understand what you mean when you say, “order me more dog food.” It connects your voice to the retailer’s system to place the order.

The Payoff: It’s the ultimate convenience. You’re opening up a whole new, hands-free way for users to buy from you.

Real World Example: Domino’s Australia was ahead of the curve, letting Pizza Lovers order a pizza just by talking to their phone or smart speaker. It set the stage for the rest of the retail world to follow.

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Challenges with AI Adoption in Retail and How to Overcome Them

Rolling out AI isn’t always a plug-and-play game. There are definitely some challenges with AI for Australian retail businesses. But none of them are deal-breakers if you know how to overcome them.

Data Privacy & Security

Challenge: The first big hurdle everyone talks about is data privacy. AI runs on data, but customers are rightly protective of their personal information. You can’t just hoover it all up without a second thought.

The Smart Solution: You have to build trust. This means being crystal clear with customers about what data you collect and how you use it. It means investing in top-notch security to protect data. Think of it less as a legal requirement and more as a promise to your customers.

High Implementation Costs

Challenge: Implementation costs for AI in retail can be substantial. According to ZenDesk, 85% of CX leaders who have implemented AI report a positive ROI. That sounds great, but it means around 15% don’t see immediate returns.

The Smart Solution: Start small. Focus on one high-impact area, like an AI chatbot or inventory forecasting, to prove ROI. A phased rollout is more manageable than a “big bang” approach.

Staff Training & Skills Gap

Challenge: You can have the best tech in the world, but if your team doesn’t know how to use it or worse, is scared of it, it’s worthless. People hear “AI” and immediately think “job replacement.” The recent disputes at Woolies over AI monitoring systems highlight how technology can create tension with workers who feel surveilled rather than supported.

The Smart Solution: Frame it as a partnership. Show your staff how AI is a tool to make their jobs better, not to make them obsolete. It automates the boring, repetitive stuff so they can focus on the parts of the job that require a human brain and a personal touch. Invest in training and make them part of the process.

Regulatory Compliance

Challenge: Navigating the complex landscape of AI regulations in Australia can be difficult, as compliance requirements evolve rapidly.

The Smart Solution: Work with an AI development company in Australia familiar with the Australian regulations to ensure your AI systems are fair, transparent, and non-discriminatory, staying ahead of evolving AI regulations.

Responsible AI & Ethics

Challenge: As AI becomes central to retail operations, responsible use and ethical considerations are more important than ever.

The Smart Solution: Australian retailers must ensure their AI systems are fair, transparent, and secure. Develop and implement clear policies for AI use, including explainable and responsible AI practices.

The Future of AI in Retail: What Lies in the Coming Years

The future of retail AI in Australia looks incredible. According to Grand View Research, the Australian artificial intelligence in the retail market generated a revenue of $310.9 million in 2024 and is projected to soar to $1,990.6 million by 2030. This whopping market growth is driven by some core AI trends.  For instance:

Agentic AI Age

Agentic AI in retail Australia represents the next evolution; it can make decisions and take actions autonomously. Imagine inventory management systems that automatically negotiate with suppliers, marketing campaigns that create and optimize content without human intervention, and customer service that resolves complex issues through intelligent problem-solving.

Think of it this way: today’s AI is like a brilliant advisor. It analyzes the situation and gives you a list of smart suggestions. Agentic AI for business is the trusted manager you empower to act on those suggestions. Imagine an AI that doesn’t just tell you to run a flash sale but actually launches the campaign, orders the extra stock, and schedules the staff to handle the rush; all on its own.

As a 2025 Salesforce report notes, Australian and New Zealand (ANZ) retailers expect AI agents to transform customer engagement and growth, with 77% of respondents believing they’ll be essential for competition within a year. In response, 74% plan to increase their AI spending this year.

Generative AI Revolution

Generative AI in retail in Australia is about to explode in ways we’re only beginning to understand. Picture this: AI systems creating personalized product descriptions for millions of items simultaneously, generating custom marketing campaigns tailored to individual customer segments, and even designing new products based on emerging trend analysis.

Soon, we’ll see AI creating virtual showrooms, generating realistic product demos, and producing interactive shopping experiences that feel completely natural. The technology will enable small retailers to compete with major chains by automatically creating professional-quality content, product photography, and marketing materials at a fraction of traditional costs.

More impressively, 91% of Australian and New Zealand retailers are now investing in generative AI, demonstrating the industry’s commitment to staying competitive.

AI Meets AR/VR

The convergence of AI with augmented and virtual reality is creating shopping experiences that were pure science fiction a few years ago. AI-powered AR will soon let customers virtually try on clothes with perfect fit predictions, see how furniture looks in their homes with accurate lighting and scale, and even test drive cars from their living rooms.

Australian retailers are investing heavily in this technology. Imagine walking through a virtual Bunnings warehouse guided by an AI assistant that knows your project requirements, or browsing JB Hi-Fi’s entire electronics catalog in a VR environment where you can interact with products before buying.

The AI component learns from every interaction, getting better at predicting what you want to see and how you want to experience products. This isn’t just about cool technology; it’s about reducing returns, increasing customer satisfaction, and creating shopping experiences that customers actually prefer to traditional methods.

AI-Blockchain Integration

While blockchain might seem disconnected from daily retail operations, its integration with AI is solving some of retail’s biggest challenges around authenticity, supply chain transparency, and customer trust. AI systems are now using blockchain to verify product authenticity, track ethical sourcing, and provide customers with complete product histories.

For Australian retailers dealing with imported goods, this means AI can instantly verify that organic produce is genuinely organic, luxury items are authentic, and ethical claims are legitimate.

This AI-blockchain integration is particularly powerful for Australian retailers competing on trust and authenticity, giving customers unprecedented transparency about what they’re buying and where it came from.

AI with Internet of Things

The integration of AI with Internet of Things devices will create seamless omnichannel experiences. Customers will interact with retailers through voice, text, and visual interfaces across all touchpoints, with AI maintaining context and preferences throughout the journey.

Human + AI: The Future of Retail Work

AI is not here to replace employees; it’s here to empower them. The future of retail in Australia is about humans and AI working together to deliver better results. Australian retailers who embrace this “human + AI” approach will build more resilient, innovative, and customer-centric businesses.

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Leverage the Power of AI in Retail with Appinventiv

The transformation of AI in retail in Australia isn’t coming; it’s here. From Woolworths’ five-fold improvement in customer conversion to Coles’ $327 million in cost savings through automation, the evidence is crystal clear: Australian retailers adopting AI are winning big.

But here’s the thing about AI implementation. Success isn’t just about having the latest technology; it’s about partnering with tech experts who understand all: retail complexities, next-gen AI capabilities, and Australian market regulations. That’s where we come in.

At Appinventiv, we help businesses take their big ideas and turn them into real, working technology that helps them make money. Our retail software development services are all about getting you from a cool concept to a tangible result.

Why Global Retailers Choose Appinventiv

With 1600+ tech experts across multiple global offices, we bring serious capabilities to every project. In our 10 years of industry experience, we have helped countless startups raise $950+ million in funding while delivering 300+ AI-driven solutions.

Our recognition includes being named “Tech Company of the Year” at the Times Business Awards 2023, a Deloitte Tech Fast 50 award for two consecutive years (2023 & 2024), and winning the Clutch Global Award 2025. We’ve also been acknowledged as The Leader in AI Product Engineering & Digital Transformation by the Economic Times in 2025.

But these numbers and accolades only tell part of the story. What sets us apart is our deep understanding of retail challenges combined with unparalleled AI expertise. Our impressive portfolio includes transformative projects for IKEA, Adidas, Edamama, 6th Street, and YK Almoayyed, each demonstrating our expertise in AI-powered retail solutions in Australia.

Ready to join the AI revolution transforming Australian retail? Your competitors are already making their moves. Don’t wait while others gain advantages that could define the next decade of retail success.

Contact our tech team today to discover how we can implement these proven AI strategies for your retail business.

FAQs

Q. How AI helps Australian retailers?

A. AI for retail in Australia gives businesses game-changing capabilities that reshape how they operate:

• Boosts demand forecasting by analyzing weather, seasonal patterns, and shopping habits
• Handles inventory automatically to cut waste and avoid empty shelves
• Adjusts prices instantly based on what competitors do and market shifts
• Streamlines supply chains through smarter routes and equipment maintenance predictions
• Creates personalized shopping that increases sales and keeps customers coming back
• Cuts operating expenses through automation and smarter decisions
• Delivers customer insights that improve marketing and product placement

Q. How AI improves customer experience in retail?

A. AI in retail in Australia changes how customers shop and get help in the following ways:

• Offers instant support through smart chatbots that work all day, every day
• Suggests products based on what people bought before and what they’re browsing
• Enables customers to find items by taking photos instead of typing descriptions
• Powers voice shopping for easy reordering without touching devices
• Creates smart stores with shorter lines and better product discovery
• Delivers loyalty rewards and instant point redemption in real-time
• Connects mobile, web, and store experiences seamlessly
• Anticipates what customers want before they ask

Q. What AI technologies are transforming retail operations in Australia?

A. Essential AI technologies revolutionizing Australian retail business include:

• Machine learning for predicting demand and managing stock levels
• Computer vision for self-checkout, theft prevention, and automatic inventory counts
• Natural language processing for customer service bots and voice shopping
• Predictive analytics for smart pricing and promotion planning
• Recommendation systems that study customer behavior for personal suggestions
• Robotic automation for supply chain and delivery management
• IoT integration is creating smart stores that track shoppers and optimize layouts
• AI-powered retail solutions in Australia, from intelligent shopping carts to fully automated warehouses

Q. What are the challenges of implementing AI in Australian retail?

A. Challenges with AI for Australian retail businesses need smart planning and careful handling:

• Privacy concerns requiring Australian law compliance and clear customer communication
• High upfront costs and long waits before seeing returns on comprehensive systems
• Staff adaptation issues, including training requirements and job security worries
• Technical complexity connecting AI with older retail systems already in place
• Finding and keeping specialized tech talent that’s often hard to recruit
• Change management to help employees adjust to AI-powered work processes
• Keeping AI systems fair and preventing bias in customer treatment
• Balancing automation benefits while maintaining quality human customer service