What: Amazon Stores CEO Doug Herrington identifies AI as the most significant technological revolution since the internet, predicting its potential to create entirely new retail formats while transforming existing operations.

Why it is important: The comparison to the internet revolution underscores the magnitude of AI's potential impact on retail, suggesting that companies must prepare for radical changes in how they operate and engage with customers.

Doug Herrington, CEO of Worldwide Amazon Stores, emphasised at the National Retail Federation's Big Show that AI represents the most transformative technology since the internet's advent. While acknowledging that mobile and social media were significant developments, he believes AI's impact will be far more comprehensive. The technology is already showing its value through applications like Rufus, Amazon's conversational shopping assistant, which has handled half a billion customer queries that traditional search couldn't address. AI is also revolutionizing customer reviews through automated summarization and tackling persistent challenges like sizing and fit in fashion through sophisticated data analysis. Herrington highlighted Amazon's unique approach to innovation, revealing how the company's culture encourages risk-taking and experimentation, allowing projects to move forward with minimal senior approval to foster innovation. This philosophy, established by founder Jeff Bezos, emphasises that more value has historically been lost by companies failing to innovate than by those who try and fail.

IADS Notes: Amazon's vision of AI as a transformative force in retail aligns with broader industry developments throughout 2024. The NRF conference in January 2024 established AI as the primary driver of retail transformation, setting the stage for major innovations. This was exemplified by Walmart's launch of its Wallaby AI system in October 2024, demonstrating how retailers are developing proprietary AI platforms to create new shopping experiences. The industry's commitment to AI adoption is further evidenced by the widespread shift from traditional tools to AI-driven solutions, though a significant gap is emerging between AI-ready retailers and those lagging behind. Amazon's emphasis on allowing innovation to flourish, even at the risk of failure, represents a crucial approach as the retail industry navigates this technological revolution, potentially spawning entirely new retail formats.

Amazon Stores CEO says AI may spawn new retail formats