AI is already reshaping the European retail value chain. The question now is how leaders modernize while strengthening the human experience—with a €240 billion to €320 billion opportunity at stake. Artificial intelligence (AI) is no longer a future trend in retail. The technology is already reshaping the entire retail value chain, from making it easier for consumers to discover and buy products to improving how retailers make decisions and speeding up how goods move from warehouses to homes.

This is happening amid intensifying global competition in AI. The technology has reached an inflection point where its commercial value is becoming clearer, attracting trillions of dollars in capital from both incumbents and new entrants. Add in geopolitical implications and the result is a market developing winner-take-most dynamics: For many, positions no longer feel secure, investment horizons are compressed, and the rate of capability improvements continues to accelerate.

AI is developing across three main areas:

• Analytical AI remains the foundation, delivering measurable value in areas such as demand forecasting, pricing optimization, and customer segmentation. For consumers, this means better product availability, more relevant offers, and fewer out-of-stock frustrations.
• Generative AI is boosting productivity and changing how retailers interact with customers, especially in marketing and content creation—leading to more personalized, engaging, and timely communication.
• Agentic AI is emerging as the next step, where systems can act more independently to handle decisions and tasks on their own. This is extending to “agentic commerce,” where AI tools help B2C and B2B customers discover, compare, and even purchase products on their behalf, making shopping faster and more seamless.

Yet tangible results from the scaled application of AI remain uneven, despite strong conviction and rising investment. Many retailers are still struggling to adopt AI at scale to deliver measurable financial impact, highlighting a growing gap between ambition and execution. As the pace of innovation accelerates, the window between experimentation and obsolescence is rapidly narrowing.

This creates a dual challenge for leaders: balancing investment in modernization while continuing to strengthen the human experience. Success will depend not on isolated use cases but on the ability to scale AI across the enterprise and embed it into core workflows.

This report gathers relevant and actionable perspectives on the impact of AI in the retail sector. We have combined EuroCommerce’s policy and sector knowledge with McKinsey’s global expertise and analytical rigor, enriched by a survey of 36 retail executives and an analysis of market data and retailers’ strategic investments in Europe. In addition, we conducted in-depth interviews with five executives across retail subsectors and more than 20 domain experts to gather real-life lessons from senior leaders. All research on which this report is based was conducted in early 2026.

AI is here. We trust this report sheds light on the technology’s impact on retailers and their customers, highlights collaboration across the value chain, and provides a practical perspective on how European retailers can navigate AI and capture its full potential.