Australian retailers are falling behind their counterparts in Europe and the US as the rise of AI-powered search and agentic commerce reshapes how consumers discover and buy products, according to Julian Skelly, Publicis Sapient Senior Managing Partner for International Retail Business.

Skelly said conversations with global retailers have shifted rapidly from general AI adoption to a more pressing question: how retailers remain visible as large language models (LLMs) increasingly become the starting point for shopping journeys.

“What’s interesting for me is there’s tons of things going on, but… what I’m getting asked about most is…what does the AI disruption mean for retailers,” Skelly told RetailBiz.

According to Skelly, many retailers are already seeing website traffic patterns change as AI systems conduct searches on behalf of consumers.

“Most retail journeys start with search, but these days, search is not leading to a click in the same way as it used to, or what retailers are finding when they look at their traffic is it’s LLMs doing the searching…Agents and retailers are just not ready for that.”

He said this shift means traditional search engine optimisation strategies alone are no longer enough.

“So the question they ask us is, how do you get ready? How do I make myself attractive or even just visible? So we talk about discoverability.”

“Retail websites… tend to be designed to be attractive and to present information or promotions in a way that you as a human can consume, but that just isn’t what agents do.”

He noted that AI-assisted search queries are becoming significantly longer and more detailed, requiring retailers to provide richer, structured product information that can respond to more nuanced customer intent.

Asked whether Australian retailers are behind in this transition, Skelly said most remain in the early stages.

“I haven’t seen much evidence of them starting on that journey.”

Deploying AI agents to reduce costs

He described AI readiness as a maturity curve that begins with making website content more “agent friendly”, followed by restructuring underlying product data and eventually modernising the technology platforms that power commerce experiences.

Skelly pointed to Pandora as an example of a retailer already embedding AI agents throughout its operations.

“If you ring up a call centre and say you have a standard query like, ‘Where’s my order?’… 80 per cent of those responses are done by an AI agent.”

“We’re seeing clients invest in that to drive cost out, which enables them to do things more effectively.”

“Retail is always a challenge between being current, being able to compete with the likes of Amazon, making the right investments and operating on low margins.”

While Australian retailers are beginning to explore similar initiatives, Skelly said the conversations remain less advanced than those taking place overseas.

“We’re having kind of early stage conversations with retailers in Australia, as opposed to having done it in say the US or Europe.”

Beyond customer service, Skelly believes loyalty programs represent another area where Australian retailers trail international markets.

He said UK retailers are increasingly replacing broad points-based programs with AI-driven personalisation based on individual purchasing behaviour.

“I use a grocer called Waitrose… when I get loyalty rewards, they’re very clearly directed at me and my purchase.”

“They know my purchase history, they know my propensity to spend, and they give me discounts… on things that I actually care about, rather than more generic points.”

Improving personalisation to boost profitability

Skelly said this level of personalisation is only possible through structured customer data combined with AI-powered recommendation engines.

He added that Australian consumers are demanding the same seamless experiences available in more mature retail markets.

“Consumers still want the great online experiences that are omni-channel.”

Although around 80 per cent of Australian retail transactions still occur in physical stores, Skelly said customers increasingly expect digital and in-store experiences to work together.

“The ability to start a search for a product online, then book it so when you go in store you know it’s going to be there… having a seamless connection between online and offline is where retailers are investing now because that’s what consumers expect.”

However, he believes many retailers are still focused on building the technology and data foundations needed to support these capabilities before they can differentiate through customer experience.

“A lot of retailers seem to be still building the foundations that are required to deliver the experience that customers expect.”

“We’re seeing in the US, in particular, more conversations around what are the use cases that are going to create better experiences for our customers or drive more value, rather than just building foundations for some imagined future.”

Looking ahead, Skelly said growing consumer expectations around personalisation will continue to push retailers towards AI-powered commerce.

“Customers are demanding and expecting personalisation. They’re being trained by Amazon and eBay and Apple. The experiences that they’re having on their devices and on the big brands are training the consumer to expect it, and then retailers need to follow.”

He said AI also presents opportunities to solve more complex shopping challenges, including helping customers buy gifts for others rather than simply recommending products based on an individual’s browsing history.

Drawing on Publicis Sapient’s work with Pandora, Skelly said the company trained AI models using the expertise of in-store staff to make recommendations that better reflect human interactions.

“What we’ve done on Pandora is we’ve used in-store assistants to train AI, so AI is better able to do those sorts of recommendations, and it feels more human.”

“We’re seeing massive uplifts in conversions… the trick is to train the agents in a way that they can represent your brand.”

The post Australian retailers lag on AI-ready commerce, says Publicis Sapient appeared first on retailbiz.

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