Artificial intelligence (AI) has emerged as a transformative force in Canadian retail, impacting everything from inventory management to customer service. Tara Conway, a retail expert with deep industry knowledge, recently sat down with Retail Insider to discuss the rapidly evolving role of AI, the unique challenges facing retailers of all sizes, and the innovative strategies required to remain competitive. As Canadian retail enters an era of technological transformation, Conway’s insights provide a roadmap for navigating this complex landscape.
“AI is no longer a hypothetical or a ‘nice to have.’ It’s now essential,” Conway stated emphatically. She explained that most retailers have already embraced AI in some form, shifting the conversation from feasibility to execution. “You can’t debate whether AI can be used—it has to be used,” she added.
While the initial concern around AI often centred on potential job losses, Conway clarified that the current focus is on driving efficiency with existing resources. “The layoffs and shrinking of retail teams in recent years have put enormous pressure on resources. AI is enabling retailers to streamline operations, from inventory management to customer personalization,” she explained.
Large-scale retailers, such as Canadian Tire, are at the forefront of this integration. “You’d be hard-pressed to find a retailer like Canadian Tire not leveraging AI. It’s embedded into their systems to manage high SKU counts and store footprints effectively,” Conway said.
Expanding AI Use Cases: Beyond Customer-Facing Roles
AI’s applications in retail extend far beyond online searches and chatbots. “Machine learning and AI are being used in areas like finance, business intelligence, and HR,” Conway noted. However, she acknowledged that some experiments, such as the use of AI in recruitment through Applicant Tracking Systems (ATS), have yielded mixed results. “The tools are only as good as the prompts you put into them, and many retailers have found that they aren’t working as effectively as hoped,” she said.
One particularly promising application is in call centres, where AI is revolutionizing customer service. “AI tools analyze website interactions and IVR (interactive voice response) data to generate answers for agents in real time,” Conway explained. “It’s not replacing humans but making them more efficient. This reduces call handling times and improves the overall customer experience.”
Marketing has also been a significant area of experimentation, particularly for smaller retailers. “Smaller retailers are using AI-driven marketing tools to test and learn without significant financial risk,” she said. “They’re often more agile and can adapt faster than larger organizations.”
Pod Reduction and Digital Integration: Rethinking Store Closures
The ongoing trend of store closures, or “pod reduction,” was another key topic Conway addressed. She emphasized the importance of integrating digital strategies to maintain brand presence in affected regions. “Everything I did when I was closing stores was to ensure I could target those regions digitally to keep sales alive,” she said.
Retailers considering pod reductions must think strategically about how digital platforms can backfill the loss of physical locations. “Pod reduction isn’t going away, but it has to happen in tandem with digital evolution,” Conway added.
Alternative Revenue Streams: Staples and Retail Media
In an era of shrinking profit margins, retailers are increasingly exploring alternative revenue streams. Staples, for instance, has integrated services like Service Ontario
kiosks into its stores to drive foot traffic. “Staples is a perfect example of a retailer optimizing its footprint to generate incremental benefits,” Conway said.
Retail media is another growing area of focus, particularly for larger retailers like Walmart. “Retail media isn’t new, but unless you’re the size of Walmart, achieving a meaningful revenue stream is challenging,” she explained. Walmart’s ability to tie its POS systems to digital media has created a robust platform for retail media, but Conway noted that smaller retailers may struggle with the complexities of managing such initiatives.
Smaller Retailers: Agility as an Advantage
While larger retailers may dominate in terms of resources, smaller retailers have their own advantages, particularly their ability to adapt quickly. “Smaller and mid-sized retailers are often more agile and can take risks with AI that larger organizations might avoid,” Conway said.
These retailers are increasingly leaning into AI-driven marketing tools, which allow them to reach their target audiences effectively without significant investment. “The lessons we’re learning from small and mid-sized retailers are invaluable,” she said. “They’re showing us how to innovate and adapt in a rapidly changing environment.”
Generational and Cultural Shifts in Retail
Canada’s diverse population and generational differences are creating new challenges and opportunities for retailers. “If a brand doesn’t exist on Instagram or TikTok, it’s not real to younger generations,” Conway observed. She pointed out that younger shoppers, such as Gen Z and Gen Alphas, have grown up with technology and expect brands to meet them where they are.
Cultural diversity is another critical factor. “The growing diversity in Canada’s population is driving demand for niche products and tailored shopping experiences,” Conway explained. She mentioned new-to-Canada retail entrants which cater to specific demographics. “These brands are thriving because they understand the unique needs of their target audiences.”
AI’s Role in Navigating Complexity
AI is proving invaluable in helping retailers navigate these complexities. By analyzing purchasing patterns and regional trends, AI can provide insights that allow retailers to tailor their strategies. “AI can help retailers make smarter decisions, but it requires careful implementation to avoid missteps,” Conway warned. She predicted that some retailers would experience failures in their AI initiatives due to a lack of best practices. “We’re in a period of rapid experimentation, and not all attempts will succeed,” she said.
Sustainability: Balancing Tech and Responsibility
While AI has taken centre stage, sustainability remains a critical issue for retailers. Conway noted that government regulations are likely to increase pressure on retailers to adopt sustainable practices. “Retailers must balance their investments in technology with commitments to sustainability,” she said.
Conway also highlighted the importance of associate-focused technology. “The phrase ‘AI plus HI (human intelligence) equals ROI’ is becoming more relevant,” she said. “Much of the new tech being developed is about enabling frontline associates to deliver better customer experiences.”
Looking Ahead: The Future of AI in Retail
As the pace of AI development accelerates, retailers must remain agile and open to change. “Last year, AI was hypothetical. This year, it’s all about real-world use cases,” Conway said. She predicted that 2025 would bring a mix of breakthroughs and setbacks as retailers refine their strategies.
Conway also emphasized the need for guardrails and best practices in AI implementation. “Retailers are still figuring out how to use AI effectively, and the next year will be crucial in establishing guidelines,” she said.
