The retail landscape is undergoing a revolutionary transformation as major players increasingly embrace agentic artificial intelligence-led commerce, a strategic pivot that prioritizes meeting customers on external AI platforms even at the cost of ceding a degree of direct customer proximity and proprietary data control. This shift, highlighted by key partnerships formed in the opening weeks of the year, signifies a growing acceptance among large retailers that the future of transactions lies within the conversational, decision-making ecosystem of third-party AI agents, ushering in what many executives believe will be a change on par with the emergence of the internet.

The core of this new retail paradigm is the rapid forging of alliances between retail giants and dominant generative AI platforms. Major companies like Etsy, Target, and Walmart have recently extended their product offerings onto external platforms, notably through new partnerships with Google’s Gemini and Microsoft’s Copilot, building on earlier integrations with platforms like OpenAI’s ChatGPT.[1][2] This cooperative strategy is a deliberate move to ensure their merchandise is available in the consumer's "moment of intent," directly within the AI environments where product discovery and decision-making are increasingly taking place.[1] For instance, the collaboration between Walmart and Google allows Gemini users to search for products, assemble a shopping cart, and complete the purchase directly inside the AI chat interface, leveraging the retailer’s expansive product selection and delivery capabilities.[3][4] Similarly, Microsoft’s Copilot Checkout enables merchants, including Etsy and Urban Outfitters, to facilitate instant purchases within the Copilot interface without redirecting the shopper to an external website, eliminating transactional friction.[2][5] This transactional streamlining has shown tangible early results, with internal Microsoft data indicating that customer journeys including Copilot led to 53 percent more purchases within 30 minutes of interaction.[6] This aggressive move into agentic commerce is partially necessitated by a significant change in consumer behavior, as evidenced by a 758 percent year-over-year surge in AI-driven U.S. e-commerce traffic between November and December, and a 670 percent increase on Cyber Monday alone, according to one major holiday shopping report.[1]

However, the pursuit of frictionless transactions on external platforms introduces significant strategic risks, chief among them the potential loss of invaluable customer data and the disintermediation of the retailer's direct brand experience.[1] When the entire customer journey—from discovery and research to the final purchase—occurs within an AI platform like Gemini or ChatGPT, the host platform controls the collection of contextual data, which includes what the shopper searched for, the products they examined, and the duration of their engagement.[1] Retailers may only receive a fraction of this crucial context, diminishing their ability to understand shopper behavior and personalize future direct interactions.[1] Experts warn that this dynamic shifts the "locus of power" to the entities controlling the AI agents, potentially relegating the retailer to little more than a fulfillment company.[1] This concern over data ownership and customer relationship management stands in stark contrast to the more closed, internally focused AI strategy of a rival like Amazon, which continues to heavily invest in its own consumer-facing AI assistants.[1][3]

To mitigate the control risks inherent in these partnerships, industry giants are rapidly working to establish open standards for this new era of commerce. Google, for example, introduced its Universal Commerce Protocol (UCP), an open standard designed to allow AI agents to execute seamless checkouts across different retail platforms.[3][6] Walmart, Target, and Etsy were among the major partners on the protocol at launch, signaling a collaborative effort to ensure that agents can check availability, pricing, and product details seamlessly across various storefronts.[3][7] This protocolization of commerce aims to provide a common technical language for AI agents, but it simultaneously reinforces the importance of the agent layer itself, effectively making protocol-level inclusion the new equivalent of search engine optimization for product discovery.[7] For the AI industry, this represents a massive new market, driving the development of increasingly sophisticated 'agent-to-agent' commerce, where a customer's personal AI agent interacts directly with a retailer's AI agent to negotiate, purchase, and manage logistics, further removing human and traditional interface layers from the process.[1]

The implications for the AI industry are profound, cementing its role not merely as an optimization tool but as the new primary channel for customer acquisition and transaction execution. With over half of retail executives anticipating the collapse of the current multi-step shopping journey into a single, AI-driven interaction by 2027, the focus for AI developers is shifting to agentic capabilities that not only recommend but autonomously act on behalf of the customer.[1] Furthermore, the AI revolution is not confined to e-commerce, as retailers are also deploying AI agents in physical stores to equip employees with instant insights on customer preferences and inventory, augmenting the in-store experience.[1] This dual-front adoption highlights the near-universal recognition of AI’s value, with a vast majority of global retail executives having already developed or actively expanding their AI capabilities.[8] The willingness of major retailers to embrace these external AI platforms, despite the risks to their direct data control, underscores a calculated bet that the enormous traffic and enhanced customer relevance delivered by agentic AI represent a greater, and perhaps unavoidable, commercial opportunity in the evolving digital marketplace. This ongoing strategic realignment is set to reshape brand-customer relationships for decades, making the AI platform the critical new gatekeeper of consumer access.[1]