How is AI impacting retail employment?

The retail sector in the U.S. is going through a major transformation as artificial intelligence (AI) and automation reshape the structure of employment.

According to UBS, the deployment of technologies such as AI, machine learning, computer vision, and robotics is beginning to touch every area of retail, from supply chain management to customer service.

Roughly 10% of all U.S. workers are employed in retail, with 65–75% of those in customer-facing roles.

As of June 2025, total retail employment stood at around 15.5 million—down from a peak of 15.8 million in 2017. Employment in retail as a percentage of total nonfarm employment has been in decline since 2016, reaching a 25-year low of 9.8%.

UBS points out that automation is already replacing repetitive tasks like floor cleaning, inventory scanning, and worker scheduling. Fulfillment processes are increasingly automated, while machine learning tools are being adopted to refine demand forecasting.

Customer-facing roles are also changing, with AI-powered chatbots becoming the first line of contact for many service issues.

“While technologies such as Just Walk Out are not able to be deployed in an economical and scalable fashion today, that is likely to change in just a few short years from now,” UBS analysts led by Michael Lasser said in a note.

Larger retailers are adapting more quickly. Walmart (NYSE:WMT) is pursuing AI and machine learning to automate its supply chain and grow its top line without increasing headcount. UBS estimates this could result in significant labor cost leverage.

“We estimate WMT could see ~40 bps of leverage from labor alone in the next 5 years if it experiences an average of 3% wage inflation,” the report said.

Kroger (NYSE:KR), for its part, has used computer vision to optimize staffing at checkouts, while Home Depot (NYSE:HD) is reinvesting automation-driven savings into front-line service.

However, the adoption of advanced technologies varies widely across the sector, and much of the initial deployment is concentrated in non-customer-facing areas.

Longer-term changes to customer-facing roles will likely be slower, UBS noted, as they require shifts in consumer behavior. Only 20–30% of Sam’s Club customers currently use Scan and Go, illustrating the challenge of mass adoption.

“Interacting with a humanoid that is trying to check out a customer or offer directions to a shopper on how to find a product won’t happen overnight. But, it is inevitable,” the analysts said.

In the view of UBS, the retail sector is “at a tipping point.” Retailers with larger, denser workforces—such as Walmart—may be better positioned to benefit from automation, both through cost savings and improved productivity.

AI is also becoming a central part of business strategy, not just a technical tool.

UBS notes that companies like Walmart are creating executive roles focused specifically on AI, such as EVP of AI Acceleration and EVP of AI Platforms. The bank expects this trend to continue across the consumer sector as AI takes a seat at the strategic table.

It also highlighted sales per employee as a measure of labor productivity. Companies including Costco (NASDAQ:COST), BJ’s, and Warby Parker (NYSE:WRBY) have seen strong growth in this metric since 2021, underscoring the efficiency gains from tech adoption.

Meanwhile, macroeconomic conditions may be accelerating the shift toward automation.

UBS expects inflation pressures to intensify, potentially weighing on consumption as real wage growth slows. That could prompt retailers to lean harder into labor-saving technologies to offset margin pressure.