The Future of Retail: Why a Human Touch is the New Luxury

As AI continues to soar, the human touch will be the defining element of retail experiences. Learn how.

Written by

Robert Woo, Writer @ Endear

Edited by

Danielle Bissonnette, Content Marketing Manager @ Endear


Experts in the retail automation space are predicting that usage will jump from about 40% automation today to 60-65% in the next few years. We’re set to see more chatbots, more automated self-service, and simply more AI managing everything from sales to supply chain.

But as the world of retail becomes progressively more intertwined with AI, a paradox is gradually revealing itself. In this era of rapid technological advancement, it is not the most technologically advanced brands that will secure the allegiance of discerning shoppers. Instead, the brands that maintain a distinctly human touch will increasingly stand out as purveyors of luxury in an increasingly automated marketplace.

After all, the major point of automation in any industry is to do tasks en masse. And for the customers, they have come to accept a level of automation for products and services that are fairly inexpensive. That’s why you’re seeing AI chatbots running Wendy’s drive-thrus, but no robot servers quite yet at a Morton’s Steakhouse.

Why the Human Element Matters to Customers

It’s safe to say AI has dramatically transformed the retail landscape in the last decade. The rise of chatbots, for instance, has revolutionized customer service, providing quick, convenient solutions to common queries and problems. Automated sales systems and recommendation algorithms have drastically streamlined the shopping process, delivering tailored suggestions with impressive accuracy.

While these developments undeniably improve the efficiency and cost-effectiveness of the retail experience for both the company and for the customers, they inevitably reduce the human element. The one-size-fits-all approach of automated services, while practical, can feel impersonal. Especially when the robots are asking for tips!

In contrast, the human touch brings a level of personalization and warmth that AI has yet to replicate, and we’re starting to see people not just prefer to interact with a human, but to also pay more for that “luxury.”

Research shows that 70% of consumers still prefer and trust human sellers over bots. People want to buy from humans that they can ask questions to, smile with, and engage in off-topic conversations. Sure, an AI chatbot may be able to do some of that, but who wants to talk about the latest movie or concert with ChatGPT?

Also, studies have long shown that people will pay more to purchase items that are handmade. The human element matters. As Harvard Business Review put it: “people will pay more for products such as greeting cards, jewelry, scarves, knives that are handmade versus machine-made because they believe the handmade items are made with intentional love.”

Balancing Retail Automation with Human Clienteling

The beauty of automation in retail is in its scope and efficiency. But we know that customers don’t always want to interact with bots. There’s already a growing backlash against those drive-thru chatbots. Where automation and AI works best is behind the scenes.

That’s why there are typically no qualms in using AI to optimize your supply chain: the customer doesn’t witness it. Chatbots for website visitors are also effective since they handle many more questions at a time at lightning speed, and web browsers are used to this by now.

We’re also fans of using AI and automation to provide more personalized messaging across marketing channels. When done right, AI can elevate your virtual clienteling by providing hyper-personalized promotions and services to a wide swath of your audience.

But retail stores that, say, direct customers to use an automated kiosk in-store will lose loyalty with their shoppers. Remember, retailers that focus on clienteling are not just selling a product; they're selling an experience. They’re understanding a shopper's preferences, anticipating their needs, and building a relationship that goes beyond a single transaction. The personalized marketing communication, customer engagement, and after-sales services that come with it are just the icing on the cake.

As with many philosophies in retail, the 80/20 rule can help here in multiple ways. Apply automation to the 80% of your business that customers don’t really get to see; the activities that go on behind closed doors. The bottom 80% of the iceberg, if you will. Ideally, that will free up more human resources to engage with customers more personally during that 20% of selling that requires service and interaction.


Automation for... Some? (Not all)

Today’s higher-end shoppers, who increasingly value experiences over products, are drawn to this degree of personal attention and service. It’s not just about the product they're buying, but also about how they're treated throughout the shopping process. This is why more and more luxury brands are shifting their focus back to clienteling services, enhancing their in-store experiences with personal shoppers, exclusive events, and personalized communication.

Typically, 20% of your customers make up 80% of sales in retail. Brands with limited resources can opt to leverage more automation and AI for the 80% while offering that “human touch” for the 20%.

This isn’t a new principle, of course. Most businesses know who their “whales” are and offer them better service. That’s why I get to talk to a monotone robot when I call about my credit card, and why the upper class holding an AmEx Black card instantly gets through to a human concierge.

The advice here is not to provide excellent service to your 20%, that’s a given. The real revelation here is that with retail automation, brands can offer a much higher level of clienteling to their 80% that they may never have had time for before.

And of course, if automation can free up more employee time, then your brand can start offering human clienteling to perhaps your top 30% or 40% of shoppers. This can have a drastic impact on your sales and revenue, as your brand will be known for its human element; fostering more loyalty and more positive word-of-mouth.

So even though the retail industry is set for even more automation in the future, brands that maintain and emphasize the human element will continue to win over the hearts and wallets of the higher-end shoppers, but also an ever growing segment of the mid-tier shoppers as well. That human element that drives engagement and sales is a luxury that technology can't replace, at least not for the foreseeable future.

Retail automation usage may increase to 65% in the coming years.

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