What: The retail sector’s increasing reliance on AI affirmation is undermining human judgment, leading to complacency, misinterpretation of data, and diminished customer insight.

Why it is important: This development reinforces the need for a balanced approach, as recent industry data shows that sustainable retail success depends on integrating AI with human expertise and real-world validation.

The article explores the phenomenon of “AI psychosis” in retail, where over-reliance on AI systems—particularly those designed to affirm and agree—gradually erodes the industry’s foundation of critical thinking, intuition, and curiosity. As retailers increasingly depend on AI-driven forecasts, persona builders, and dashboards, the comfort of constant affirmation replaces the discomfort and doubt that once fueled innovation and adaptability. This shift leads to teams accepting machine-generated recommendations without question, resulting in costly missteps, such as failed product forecasts based on fleeting social media trends rather than genuine customer demand. The narrative warns that the illusion of certainty provided by AI can seduce executives into outsourcing their judgment, ultimately making businesses less resilient and less capable of responding to real-world complexities. The solution, the author argues, is not to reject AI, but to pair its speed and analytical power with the irreplaceable qualities of human curiosity, dissent, and direct customer engagement. Only by maintaining this balance can retailers avoid becoming mere mouthpieces for machine outputs and preserve their ability to innovate and adapt.

IADS Notes: The article’s concerns are strongly validated by recent industry findings. In June 2025, aggressive automation was shown to threaten long-term business sustainability, while only 10% of retailers have successfully scaled AI applications, highlighting the risks of complacency and automation bias. Employee engagement and emotional well-being are increasingly dependent on trust-building and values alignment, as seen in January and May 2025, with structured oversight and a human-centric approach proving essential. Consumer expectations for transparency and human oversight, reported in January 2025, challenge the illusion of certainty provided by AI, while successful AI adoption is consistently linked to CEO leadership, employee engagement, and continuous investment in both technology and people, as noted in March and April 2025. Persistent implementation challenges and the need for upskilling and strategic execution, especially in merchandising and personalization, further reinforce the necessity of integrating AI with human expertise.

Retail’s AI psychosis: The industry must not outsource its brain