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Kudosity has published survey findings showing Australian online retailers are prioritising AI to improve customer acquisition and retention. The research found that, by 2027, the main AI goals are building competitive advantage and improving customer experience and productivity.
The survey of retail and eCommerce leaders was conducted at the 2026 Yotpo CEO and Founder Leadership Retreat. It found 63 per cent of respondents named competitive advantage as a key AI objective, while 50 per cent cited better customer experience and productivity.
Pressure on growth was also clear. Some 56 per cent said the biggest constraint was the inability to acquire new customers cost effectively.
That points to a sharper focus on customer acquisition costs and lifetime value as retailers decide where to apply AI. The results suggest businesses are viewing the technology less as a broad experiment and more as a way to address specific commercial pressures.
Even so, customer relationships remain central. If all brands were on equal footing in AI, 44 per cent of respondents said stronger customer relationships would give them an edge.
Rad Mitic, Head of Brand Advocacy and Ecosystem, APAC, at Yotpo, said the commercial case for AI needs to stay grounded in business outcomes.
"AI isn't a strategy. It's a tool. Retailers need to stop chasing the hype and start using it to solve real problems that drive revenue. Technology might level the playing field but customer relationships will separate the winners from the rest," Mitic said.
Customer friction
The survey also examined where retailers see the biggest barriers in the customer journey. Discovery and consideration ranked highest, with 44 per cent identifying those stages as the main source of friction.
That put early-stage customer engagement ahead of checkout and conversion, delivery and post-sales service, customer support and retention. The pattern suggests many retailers believe the toughest challenge comes before a shopper reaches the point of purchase.
Tori Starkey, Director at Kudosity, linked that pressure to the difficulty of standing out in a crowded online market.
"In a crowded digital landscape, connecting with customers and providing them with compelling, well-priced offers - and a reason to buy - is critical," Starkey said.
Adoption barriers
Retailers also reported internal obstacles to wider AI use. Lack of skills or team capability and difficulty proving a commercial return were each cited by 31 per cent of respondents as factors limiting the value they are getting from AI.
On deployment challenges, 25 per cent pointed to cost and the same share cited the availability of technical expertise. Those responses indicate that interest in AI is not being matched evenly by confidence in execution.
Starkey said businesses do not need to start with large-scale technical projects.
"Retailers, however, don't need to hire an AI specialist to get started," Starkey said. "Pick a customer problem your team understands, like why repeat purchases are slowing. Tools like Codex or Claude Code can guide people through a small experiment and help them learn by doing. Try it first with a made-up or anonymised example, have someone check the output and see if it suggests a useful action. As the team builds confidence, it can take on more complex work, with the right review before connecting to live customer systems. Upskill first, then scale what works."
The survey comes against a retail market facing weaker consumer confidence and rising costs. According to CommBank iQ, Australian consumers spent AUD $23.8 billion over the Black Friday shopping period in 2025, setting a high benchmark for merchants heading into the next holiday season.
Retailers are now weighing AI investment against a more difficult trading environment marked by inflation, higher interest rates and geopolitical uncertainty. In that context, the findings suggest businesses are under pressure to justify technology spending through clearer gains in customer acquisition, retention and profitability.
For many online retailers, the immediate appeal of AI appears to lie less in automation for its own sake and more in whether it can reduce the cost of winning and keeping customers. The results also point to a more practical phase of adoption, in which businesses test tools against measurable outcomes rather than broad digital transformation ambitions.
"Retailers that want to achieve maximum value from AI should ensure investments in the technology are linked to profitable acquisition and stronger customer relationships," Starkey said.