AI adoption grows in Singapore retail as trust concerns persist

Salesforce has released its latest Connected Shoppers Report, indicating a significant rise in adoption and investment in artificial intelligence (AI) agents among retailers in Singapore, as well as growing consumer readiness to engage with AI-powered solutions.

The report is based on findings from surveys of 500 shoppers and 100 retail industry decision-makers in Singapore, aiming to shed light on how agentic AI is influencing the local retail sector amid increasing cost pressures, growing customer expectations and an evolving technological landscape.

According to the report, 69% of retailers in Singapore view AI agents as essential to maintaining a competitive edge within the coming year, a reflection of the urgent need to adapt as profit margins narrow. Additionally, 85% of retailers intend to ramp up their investments in AI technology in the next twelve months.

Rising customer acquisition costs, inflation and competitive pressures continue to challenge the sector, while shifting consumer preferences are adding complexity to the traditional shopper journey. Physical stores remain significant to Singapore's retail ecosystem, but their purchase share is expected to drop from 43% in 2024 to 38% by 2026, with digital commerce becoming increasingly fragmented across various online platforms such as marketplaces, retailer websites, brand sites and delivery applications.

To address these challenges, Singaporean retailers are prioritising enhanced store associate productivity, improved customer service quality, and the implementation of unified commerce strategies that integrate multiple channels and operational departments onto a single platform.

Salesforce's report highlights that AI agent adoption is seen as a path forward by many in the industry. Marketing emerges as one of the primary use cases for AI agents, where automated technology can dynamically segment audiences, tailor messaging, and trigger campaigns in response to real-time customer behaviours. This allows marketing teams to focus their efforts on strategy and creativity.

Velia Carboni, Chief Information Officer of SharkNinja, commented on the use of Agentforce, the agentic layer of the Salesforce Platform, stating: "Agentforce is key to helping us build a community that keeps consumers coming back."

Retailers also expect AI agents to support various operational tasks, such as website optimisation, marketing management, training store associates, and inventory control, extending the impact of AI well beyond traditional customer service applications.

The effective deployment of AI agents is closely linked to the pursuit of unified commerce. According to the report, 75% of Singaporean retailers claim that inefficient systems and processes hamper store associate productivity. Furthermore, 61% of shoppers in Singapore reported abandoning a purchase due to friction in the ordering process, demonstrating the negative impact of disconnected systems on customer experience.

The survey found that 82% of Singapore retailers are progressing with unified commerce initiatives, aiming to consolidate operations, improve overall efficiency and enhance the shopper experience while enabling AI agents to function with access to cleaner, cross-channel data.

Brian Kealey, Area Vice President and Country Leader for Salesforce Singapore, said: "Retailers in Singapore grapple with high rental costs, persistent labour shortages, and increasing customer expectations. Agentforce offers retailers an opportunity to reach new levels of productivity by supporting time-intensive tasks such as responding to customer queries, modifying orders, issuing returns and managing inventory without human intervention. To fully leverage AI, Singaporean retailers must integrate it within a unified commerce platform, connecting front- and back-end operations for efficiency and personalised customer experiences."

On the consumer side, 36% of shoppers in Singapore are already utilising AI for product discovery, with the figure rising to 53% among Gen Z. This aligns with broader Asia-Pacific trends, where Gen Z shoppers are 4.7 times more likely than baby boomers to frequently use AI in this way. Shoppers in Singapore demonstrate a substantial willingness to use AI agents for tasks such as optimising loyalty points and obtaining rapid responses from customer service. For many, customer service represents the second most significant use case for AI agents, echoing retailer priorities.

Trust emerged as a central concern for shoppers regarding AI agents making purchase decisions on their behalf. Among Singaporean respondents, the highest-ranked factors necessary for building trust included data privacy and security protections, requirements for purchase approvals, transparency in data usage, easy options to enable or disable AI features, and the availability of human customer service support.

The Connected Shoppers Report is based on double-anonymous surveys conducted between late November and late December 2024, covering 8,350 shoppers and 1,700 retail decision-makers globally, of which 500 shoppers and 100 decision-makers were from Singapore. The survey sought to gather perspectives on current AI adoption, future investment trends and the changing dynamics between consumers and retailers in the digital economy.

The research comes amid a period of rapid evolution in the retail industry, where both businesses and customers are increasingly engaging with AI solutions. As retailers look to AI agents to increase efficiency and competitiveness, the feedback from Singaporean shoppers underlines the centrality of trust, transparency and consumer control as essential elements for broader adoption.