Footfall across Scotland rose 0.4 per cent year on year in the four weeks from 3 to 30 May, according to the latest SRC-Sensormatic data, rebounding from a 5.2 per cent fall in April.

The result made Scotland the best-performing UK nation or region for retail footfall during the month.

Shopping centres saw footfall rise 1.3 per cent year on year, while retail parks posted a 1.5 per cent uplift, suggesting shoppers made use of warmer weather and bank holiday periods to visit physical retail destinations.

Edinburgh was the strongest-performing city in the UK, with footfall up 2.5 per cent year on year in May, recovering from a 3.8 per cent decline in April.

Glasgow footfall slipped 0.6 per cent, although it still performed ahead of most major UK cities.

Across the rest of the UK, London footfall was flat year on year, while Northern Ireland was down 1 per cent. England recorded a 3 per cent decline, Wales dropped 5 per cent and the South West of England was the weakest-performing region, down 5.3 per cent.

Scottish Retail Consortium deputy head Ewan MacDonald-Russell said: “Scottish retail footfall just about stayed positive as the warm weather outweighed consumer concerns about the economy.

“Footfall overall was up by 0.4 per cent, the best figures in the UK, as Scots enjoyed the eventual arrival of the sunshine.

“Edinburgh continues to perform well, partly driven by strong visitor numbers, to be the best performing city in the country. Glasgow saw slightly reduced footfall but still outperformed much of the rest of the UK.

“Shopping centres and retail parks both saw rises in footfall, indicative that these were popular on the bank holidays.”

However, MacDonald-Russell warned that retailers still face a difficult trading backdrop, with consumer confidence under pressure and inflation expected to rise in the coming months.

“Whilst the figures might look sunny there remain significant clouds on the horizon,” he said.

“Consumer confidence remains depressed as a result of the costs accruing from the international instability.

“The new Scottish Government will need to tread carefully with their policy interventions if they don’t wish to exacerbate those concerns.”

Sensormatic Solutions EMEA retail consultant Andy Sumpter said May had brought “a modest but welcome improvement” for Scottish retail.

“Consumer confidence may be edging up slightly, but it remains fragile, with geopolitical uncertainty continuing to weigh on discretionary spend,” he said.

“While May’s growth is modest, it suggests Scotland is holding firmer ground rather than seeing a full retreat from physical retail.

“For retailers, the challenge and the opportunity lie in building on this resilience, converting purposeful visits into meaningful spend by delivering the right mix of value, relevance and experience as we head into the summer months.”

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The body released a new report titled The State of AI in Advertising: Charting the Shift from Automation to Autonomy which looks at how generative and agentic AI are reshaping the sector.

It found that 58 per cent of its members are experimenting with AI within their organisations and a further 16 per cent reported that they are “scaling agentic systems” or using  “agent-first” marketing procedures.

The study highlighted that 63 per cent of IAB members are expecting AI to have a “transformative impact” on creative growth over the next 12 months.

Todd Parsons, chief product officer at Criteo said: “”There’s still a whole lot of room for advertisers to help consumers through AI… whether that’s to find products more effectively or discover new brands that might not have been found otherwise with search.

“There are opportunities to influence the way that models interact with us as consumers and guide us through discovery”

Around third thirds of advertisers have implemented changes to their metadata, content strategies and content strategies due to the rise of generative engine optimisation.

According to the IAB’s research, 74  per cent of respondents believed AI summaries are reducing traffic to brand websites.

However, only 4 per cent of members believed that they were “agent-first”, with many citing concerns around governance, data security, accountability and transparency.

Trust is a major issue with 47 per cent of advertising reporting they do trust AI agents in advertising due to a lack of transparency. This figure rises to 67 per cent among IAB members.

James Chandler, CSO, IAB UK, said: “The industry is entering a new phase of AI adoption where the conversation is no longer simply about efficiency gains or workflow automation.

“We are now seeing the emergence of agentic systems that can actively participate in media planning, optimisation, creative adaptation and commerce. The opportunity is significant, but the industry also needs to solve for transparency, accountability and interoperability if AI is to scale sustainably.”

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For many retailers, the conversation around artificial intelligence still begins and ends with generative AI.

Chatbots, content tools and customer-facing assistants have dominated the discussion since the arrival of large language models in the mainstream. They are highly visible, easy to understand and simple to demo in the boardroom.

But according to Dr Daniel Hulme, CEO and founder of enterprise AI business Satalia and chief AI officer at WPP, that narrow view risks distracting retailers from where AI can make the most meaningful difference.

“Most people think AI is generative AI,” he says. “The reality is there are many different types of algorithms out there that we bundle in terms of what we call AI, from machine learning to optimisation.”

Hulme has spent more than two decades researching, building and implementing AI systems. Satalia, founded in 2008 and later acquired by WPP, has worked with companies including Tesco, DFS, Waitrose and The Coca-Cola Company. Its expertise sits in the less glamorous but commercially critical world of optimisation, operations research, machine learning and decision intelligence.

In Hulme’s view, generative AI is only capable of addressing a relatively small slice of the friction inside a retail business.

“If I’m being totally honest, I think generative AI probably can address about 10 per cent of the frictions across the retailer supply chain,” he says. “You get the biggest bang for your buck if you use optimisation algorithms.”

For retailers under pressure to reduce cost, improve availability, protect margin and serve customers faster, that should be a wake-up call. AI’s greatest value may not be in the front-end experiences everyone can see. It may be in the invisible systems deciding how vans are routed, how stores are staffed, how engineers are allocated, how stock moves and how capacity is unlocked.

Where AI actually creates operational value

One of Hulme’s clearest examples comes from Tesco’s last-mile delivery operation.

Around 12 years ago, Satalia built Tesco’s last-mile delivery solution after the retailer concluded that no existing system could deliver the level of performance it needed. The challenge was not a chatbot problem. It was a series of optimisation problems, each with its own technical complexity.

When a customer enters their address and asks to see delivery slots, the system has to calculate how long it would take to get from that address to existing stops in the schedule. That means producing what Hulme calls a travel matrix in milliseconds.

“If you go and ask Google Maps, give me 1,000 routes, it’s going to take several minutes,” he says. “To be able to create 1,000 or even 3,000 routes that are accurate in 100 milliseconds required us to build bleeding-edge routing algorithms.”

The system then has to decide which slots can be offered, optimise the schedule between one customer booking and the next arriving, then later rebalance routes across drivers so workloads are fair, vans are staggered and capacity is maximised.

The impact was substantial. Hulme says the work helped Tesco save around 20 million miles a year, reducing carbon emissions while unlocking greater delivery capacity.

Satalia has since applied similar thinking to Waitrose, as well as middle-mile challenges such as moving goods from depots to stores. Hulme says a middle-mile project for Tesco took seven years to solve because the problem had never been cracked in that way before. Once solved, however, the underlying innovation could be deployed elsewhere far faster.

“The reason why it took seven years is because that problem had never been solved before,” he says. “But by solving that problem, we can now deploy that new innovation to another company in three months.”

That is a critical point for retailers. Bespoke AI doesn’t always mean starting from zero. Some underlying algorithms can be repurposed across organisations, while others must be tuned to the specific shape of the business.

A grocery drop may have relatively predictable delivery characteristics. A sofa delivery may take anything from 10 minutes to three hours, depending on access, installation and the reality of the customer’s home. The model has to understand the difference.

The hidden value in workforce and store optimisation

The same logic applies beyond vans and warehouses.

Hulme points to work with UK Telco, where machine learning was used to predict the nature of infrastructure faults, the skills of engineers and how long each engineer might take to solve a specific issue. The aim was to stop sending people to jobs they were not best equipped to complete.

“That project had a 200 times return on the investment,” he says.

In retail, a similar approach can be applied to store labour. Hulme cites DFS, where Satalia used machine learning to predict store footfall and customer demographics, then optimisation to allocate the right staff against the shape of demand.

Many retailers still roster teams in ways that are too blunt. A store may be staffed in similar patterns across the week, despite customer behaviour changing sharply by day, hour and demographic. Matching labour to demand is not just an efficiency play. It can directly influence sales, service quality and employee experience.

That wider view is important. Hulme argues AI should not be used to chase a single KPI in isolation. When it is, businesses can end up improving one metric while creating problems elsewhere.

He points to work with a leading accountancy firm, where Satalia built an algorithm to allocate thousands of auditors to jobs. The goal was not simply to increase utilisation. It was also to reduce travel time, improve employee happiness and strengthen client continuity.

“AI can improve all of your KPIs, not just one of them,” Hulme says. “If you focus on just one KPI, it can massively overachieve that goal, and by overachieving that goal, it can then actually cause harm elsewhere in the supply chain.”

For retail leaders, this may be one of the most important lessons. AI cannot be treated as a bolt-on efficiency project. It has to be understood as an operating model issue.

Start with frictions, not technology

If retailers want to move beyond hype, Hulme believes they should begin by listing the frictions across the organisation.

That means identifying where work is slow, repetitive, costly, unpredictable or constrained. Some of those problems may be solved with simple automation. Some may be addressed by buying mature third-party software. Others may require specialist AI expertise and custom-built solutions.

He describes it as a three-part strategy.

First, employees should be given access to tools that help them innovate at the edge of the business. Second, companies need to identify the hard problems where deep specialist expertise can create competitive advantage. Third, they should use partners and existing AI products for back-office tasks they do not need to build themselves.

“Start with listing all your frictions and then start knocking them off one by one by either building them, co-creating them or buying them,” he says.

This is also where the data conversation needs to mature.

For years, retailers have been told to build data lakes, unify everything and wait until their data is ready. Hulme is blunt about that approach.

“Don’t wait for your data lake to be ready. Your data will never be ready,” he says.

Instead, he argues that businesses should start with a clearly defined problem. Once the objective and constraints are understood, the necessary data becomes clearer.

In the accountancy firm example, the problem was how to allocate staff more effectively to jobs. That meant defining the objective function, such as maximising utilisation and minimising travel time, then mapping the constraints, such as availability, skills and client requirements. Only then does the data challenge become practical.

“A problem well defined is half solved,” Hulme says.

That does not mean data quality is unimportant. Poor data can produce poor decisions. But retailers should not confuse imperfect data with unusable data. In many cases, data issues only surface once a system is tested in the real world.

From optimisation to digital twins

The longer-term opportunity is not just solving individual operational problems. It is connecting those solutions together.

Hulme believes retailers should ultimately be working towards digital twins of their organisations, allowing them to model how one decision affects the wider system.

For example, a marketing campaign may increase demand by 10 per cent. But can suppliers cope? Is there enough warehouse space? Are there enough drivers? Can stores fulfil demand? Will the customer promise hold?

“Most retailers, because they are siloed, can’t project those questions across their supply chain,” Hulme says.

The promise of AI, he argues, is to create a simulation layer that allows retailers to test those scenarios before they become operational problems.

DFS offers a clear example of where this can lead. Satalia worked with the retailer on last-mile and middle-mile delivery, then helped build towards a broader digital twin. Hulme says DFS later platformised some of that delivery innovation through The Sofa Delivery Company, turning what began as an internal capability into a revenue-generating opportunity.

“That is the opportunity with AI,” he says. “If you build something that is genuinely differentiated, you can turn it into a revenue generator.”

Why quick wins can be a trap

Retailers are understandably under pressure to show progress. Boards want AI strategies. Shareholders want evidence of adoption. Leadership teams want quick wins.

But Hulme warns that quick wins can be misleading.

Most low-hanging fruit, he says, can be solved by third-party tools at a fraction of the cost. The problems that create true differentiation are usually not quick or easy.

“You need to focus on the problems that are going to differentiate your supply chain,” he says. “And those problems are not quick and they’re not easy.”

That creates a difficult challenge for C-suite leaders. They are being bombarded with AI vendors, consultancies and platforms. Many are being told to build internal teams, launch pilots or adopt the latest agentic tools, often without a clear view of what problem they are actually solving.

Hulme is sympathetic to that pressure but firm on the risk.

“Organisations can’t afford over the next three to five years to place the wrong bets,” he says.

The agentic AI ‘reality check’

No AI discussion in 2026 can avoid agents.

Agentic AI has rapidly become the industry’s latest obsession, promising autonomous systems that can take actions, complete tasks and collaborate with other tools or agents. Hulme believes agents will become hugely important, but he is clear that the market is still immature.

He compares the current agentic moment to the big data boom.

“People think everybody’s doing it, nobody’s doing it, but if they are doing it, they’re doing it badly,” he says.

The difference, he adds, is that agents will eventually drive real value. The danger is that companies deploy them before they know how to verify whether they work.

Large language models, he argues, are still like “intoxicated graduates”. They can be impressive, but giving them agency across a business without proper testing could create serious harm.

The issue is not just security or performance. It is functional verification. If an agent is built to optimise a media plan, for example, can the business prove it will do that well? If it is given a £1m budget, can the business be confident it will not spend it badly?

Hulme believes this will become one of the defining governance questions of the next phase of AI adoption.

The message is becoming increasingly clear. AI agents may be coming, but they need structure, accountability and verification before they are trusted with meaningful business decisions.

The real competitive divide

Hulme’s view of AI in retail is both optimistic and cautionary.

The technology can unlock capacity, reduce waste, improve service, support employees and create new revenue streams. But only when retailers understand the difference between shiny tools and strategic capability.

Understanding where those key frictions are, which problems are worth solving, which capabilities are differentiating, and which experts they need around the table, is fundamental to building AI-centric solutions that have longevity.

But that requires a shift in mindset. AI is a way to rethink how the business allocates resources, predicts demand, responds to complexity and makes decisions at scale.

That work is harder than launching a generative AI pilot, but it’s also where the real value lies.

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New BRC-Opinium data shows expectations for the UK economy over the next three months rose to -48 in May, up from -53 in April.

Consumers’ expectations for their own personal finances also improved, rising to -16 from -21 the previous month.

Retail spending expectations edged up to +7 in May, compared with +5 in April, while overall personal spending remained unchanged at +15.

However, the figures suggest shoppers are still under pressure, with personal saving expectations holding at -8.

Concerns over the impact of conflict in the Middle East also rose during the month.

The proportion of consumers expecting the conflict to push up food prices increased to 82 per cent in May, up from 80 per cent in April.

Those expecting it to raise non-food prices rose to 74 per cent, while 83 per cent said they believed it could increase energy bills, up from 81 per cent the previous month.

BRC chief executive Helen Dickinson said consumer confidence had seen a “slight lift” following signs of de-escalation in the Middle East, with younger shoppers helping drive the improvement in expectations for the economy and household finances.

She said this had been supported by rising real wages among younger consumers, although the overall outlook remained fragile.

“But the outlook remains fragile. Inflation is set to rise, and more than four in five people expect food prices to climb,” Dickinson said.

She urged the Government to act on rising costs facing retailers and their supply chains, warning that pressure on business energy bills could feed through into higher prices for households.

“If Government wants to keep consumer confidence heading in the right direction, it must now make a choice. Act now, or let these inflationary pressures spiral, pushing up prices for households,” she said.

“Energy prices are pushing up costs for retailers and their supply chains, with the government’s energy taxes and levies making up as much as 65 per cent of business bills.

“Cutting these charges is the fastest way to ease inflation and support consumer confidence. Delay will only make the next cost of living squeeze harder for households.”

The BRC-Opinium Consumer Sentiment Monitor was conducted between 5 and 8 May 2026, with a sample of 2,000 UK adults.

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Global supply chain verification firm Oritain’s inaugural 2026 Global Supply Chain Intelligence Report found that 90% of brands analysed showed exposure to prohibited cotton in 2025, up sharply from 64% the previous year, despite widespread investment in traceability programmes.

According to the report, nearly 94% of UK businesses and 87% of US firms surveyed now trace their cotton supply chains, but Oritain argues that documentation alone is no longer enough to guarantee compliance or build consumer trust.

The report describes a growing “verification gap” between what businesses believe is happening in their supply chains and what forensic testing can actually prove.

Using a multi-year sampling programme analysing around 1,000 garments across 40 brands annually, Oritain said exposure to cotton prohibited by legislation had returned to pre-2021 levels after several years of improvement.

Meanwhile the data shows consumer scepticism is also intensifying, with 60% of shoppers now actively avoiding products linked to untrusted origins, while just 3% trust marketing claims alone, according to the research.

“The data tells a clear story: risk isn’t disappearing, it is re-emerging,” said Oritain CEO Alyn Franklin.

“As brands pivot manufacturing regions they’re finding that upstream material exposure hasn’t gone away, it is increasingly appearing in other key manufacturing hubs.”

The report argues that supply chain assurance models based on paperwork and periodic audits are becoming increasingly inadequate in a more enforcement-led environment.

Oritain said brands are facing rising operational risks including border delays, financial penalties and supply disruption, with 80% of UK brands surveyed reporting material impacts linked to sourcing issues.

Looking ahead, the company is calling for wider adoption of forensic verification technologies. It is understood these include isotope and trace element analysis, in a bid to independently confirm product origins across industries including fashion, leather, timber, coffee and dairy.

The report also found growing consumer demand for stronger proof of ethical sourcing, such as 69% supporting mandatory verification requirements for leather products.

Franklin added: “Visibility without verification no longer holds. What matters now is evidence that stands up.”

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The business group, which represents tens of thousands of companies across the UK, said crime was forcing bosses to divert time and money away from growth and investment.

A survey of 1,411 businesses found that a fifth had been hit by fraud or scams, while 21 per cent said they had experienced cyber attacks.

BCC policy manager Ellis Shelton said crime against businesses was now becoming “a serious barrier to growth and investment across the UK”.

“Our research shows many firms are dealing with rising levels of theft, fraud and cyber attacks,” he said.

“Bosses are being forced to divert crucial time and money to tackling this anchor on growth.

“Crime is becoming more sophisticated and there needs to be a step change in the support businesses can count on.”

The BCC is urging ministers to introduce a dedicated cyber attack reporting system for companies, create regional business crime hubs bringing together police and business crime reduction partnerships, and expand cyber and fraud resilience support for SMEs.

It has also called for more incentives to help firms invest in security.

A string of major cyber attacks hit UK businesses last year, including Marks & Spencer, Co-op, Jaguar Land Rover and Booking.com.

M&S said it took a £324m hit to profits after the retailer was forced to suspend online orders for more than six weeks following a damaging cyber attack.

The Jaguar Land Rover hack has been estimated to have cost the UK economy £1.9bn, making it potentially the most expensive cyber attack in British history.

Retailers have also continued to raise concerns over shoplifting, with police-recorded offences rising 20 per cent year on year to 516,971 in the 12 months to December 2024. By March 2025, the annual total had climbed above 530,000.

The issue has become an increasingly urgent concern for the sector, with retailers investing heavily in security, staff protection and loss prevention measures as incidents of theft, abuse and violence continue to rise.

A separate BCC survey carried out last autumn found that larger companies were more likely to be affected by crime, rising from 32 per cent of microbusinesses to 58 per cent of firms employing more than 250 people.

Manufacturing was the hardest-hit sector, with half of companies reporting that they had experienced business crime.

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UK borrowing costs jumped on Tuesday as investors reacted to uncertainty over Sir Keir Starmer’s future, alongside fears that higher oil prices could keep inflation elevated. The 10-year gilt yield briefly hit 5.13 per cent, its highest level since the 2008 financial crisis, while the 30-year yield reached 5.81 per cent, the highest since 1998.

The immediate issue for the retail industry is not Westminster drama in itself, but what it does to the cost of capital, consumer confidence and the government’s room for manoeuvre.

Higher gilt yields can feed through to wider borrowing costs across the economy. That’s a stumbling block for retailers refinancing debt, funding store investment, rolling out logistics projects or backing ecommerce and technology upgrades. It also matters for consumers, as higher market rates can keep mortgage and credit costs elevated, squeezing discretionary spending.

The timing is not ideal for the industry. Retail sales fell three per cent year on year in April, according to the BRC-KPMG Retail Sales Monitor, with food sales down 2.5 per cent and non-food sales down 3.3 per cent. In-store non-food sales dropped four per cent, underlining the pressure on categories most exposed to changes in disposable income.

A leadership crisis could also complicate tax and spending policy at a time when retailers are already warning that government-imposed costs are feeding into prices, hiring plans and investment decisions.

The British Retail Consortium said retail employment costs rose by £5 billion in 2025 because of higher employer National Insurance contributions and the National Living Wage. It calculated that the cost of employing a full-time entry-level worker rose 10 per cent, while the cost of a part-time worker rose more than 13 per cent.

That cost pressure is already moving through the supply chain. 2 Sisters Food Group, one of the UK’s largest poultry suppliers, this week passed higher labour costs on to supermarket customers, in one of the clearest recent examples of policy-driven cost inflation reaching major retailers.

The danger for the sector is that political uncertainty narrows the options available to government. If investors demand a higher risk premium to hold UK debt, any administration faces less headroom for business rates reform, targeted support on energy costs, skills funding or measures to stimulate high street investment.

That could leave retailers facing the worst of both worlds, rising costs without meaningful policy relief.

There’s also a confidence effect, retail is unusually sensitive to political and economic signals because households can delay big-ticket spending quickly. A customer who’s worried about mortgage costs, energy bills or job security can cut back on fashion, homewares, electricals and hospitality almost immediately.

That’s particularly poignant for retailers heading into the second half of the year, when ordering decisions, promotional plans and Christmas stock commitments are already being made. Uncertainty over the direction of tax, employment policy and inflation makes planning harder, especially for businesses working on thin margins.

The political backdrop isn’t the only driver of the market moves. Reuters reported that inflation fears linked to higher energy prices from the Iran conflict were also pushing up borrowing costs, with investors weighing the possibility that the Bank of England may need to raise interest rates if price pressures persist.

Energy and fuel costs touch almost every part of the operating model, from distribution and refrigeration to store heating, supplier costs and consumer petrol spending.

The BRC has already called on the government to act on rising domestic policy costs as the Middle East conflict fuels concern over food prices. Its polling found 80 per cent of people feared the conflict would push up food prices.

Food retailers may be better placed than discretionary chains to hold volumes, but supermarkets are still exposed to cost inflation, wage pressure and supplier negotiations. Any further rise in energy, packaging, transport or imported goods costs would make price investment harder to sustain.

For non-food retailers, the risks are sharper. Fashion, home, furniture and electricals are more dependent on consumer confidence and credit conditions. If gilt market volatility keeps borrowing costs high and sterling weakens, import-heavy retailers could face additional margin pressure from currency movements.

Sterling fell against the dollar on Tuesday as borrowing costs rose, according to Reuters. A weaker pound can raise the cost of dollar-priced imports, shipping, energy and raw materials, adding another inflationary channel for retailers and suppliers.

Banks also came under pressure amid concern over possible tax changes under a future administration. Lending appetite has lasting ramifications for store investment, private equity-backed chains, property transactions and restructuring activity. A more cautious financing market could slow expansion plans and make turnaround funding harder to secure.

The risk for government is that retail becomes both an inflation channel and an early warning sign. When costs rise, the sector can absorb some pressure through margin, push some to suppliers, reduce jobs or investment, or pass costs to shoppers. None of those options is painless.

The industry has already warned that higher taxes would lead to price rises, job cuts and delayed store openings. Last year, the BRC said 42 per cent of retail finance chiefs had frozen recruitment, 38 per cent had reduced in-store job numbers and 15 per cent had delayed opening new stores.

That means the political instability around Starmer’s premiership isn’t just a Westminster story for retail leaders. It affects the assumptions behind pricing, wages, investment and consumer demand.

If the government stabilises and markets regain confidence in fiscal policy, the impact on retailers may be limited to a short period of volatility. However, a prolonged leadership battle or a perception that fiscal rules could be loosened would keep pressure on gilts, sterling and inflation expectations.

For the industry, the key question is whether the government can provide enough stability to keep borrowing costs, tax policy and consumer confidence from becoming another drag on trading.

Until that becomes clearer, many retailers are likely to protect cash, scrutinise hiring and investment, and remain cautious on price cuts beyond targeted promotions.

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New figures for the 12 weeks to 19 April 2026 show Lidl sales rose by 8.8%, lifting its market share to a record 8.4%, up from 8.0% a year earlier.

The discounter added more than half a million shoppers over the period, more than any other retailer, once again bringing it side by side with rival Morrisons.

Online grocer Ocado was the fastest growing overall, with sales up 11.3%, pushing market share to 2.2%, up 0.2 percentage points year on year.

Tesco and Sainsbury’s also maintained momentum following their recent full-year results. Tesco sales rose 4.3%, increasing market share to 28.1%, while Sainsbury’s sales climbed 4.5%, taking share to 15.5%.

Morrisons posted more modest growth of 1.1%, leaving it level with Lidl on 8.4% share, while Asda held 11.6% of the market.

Aldi’s sales increased 1.2%, with market share steady at 10.6%, while Iceland grew 2.1% to 2.3%. Co-op accounted for 5.1% of the take-home grocery market.

Among more premium retailers, Waitrose sales rose 3.8%, maintaining a 4.6% market share, while M&S food sales increased 7.3%.

Meanwhile, the data showed the wider grocery market remained subdued, with take-home grocery sales rising 0.9% in the four weeks to 19 April compared with the same period last year.

Like-for-like grocery inflation eased to 3.8%, suggesting disruption linked to the conflict in the Middle East had not yet significantly affected supermarket shelf prices in Britain.

However, shoppers remain price conscious. Wordpannel figures indicate spending on promoted products rose 7.8% year on year during the four-week period, while spending on full-price goods fell 0.2%, highlighting growing demand for discounts and deals.

“Concerns about the impact of the Middle East conflict on prices of everyday goods are front of mind for British households,” said Wordpanel by Numerator head of retail and consumer insights Fraser McKevitt. “Already feeling the squeeze at the petrol pump, shoppers are responding by turning to special offers in growing numbers when buying groceries.”

“The proportion of spending on promotions currently stands at 31.3%, having risen year on year every month since July 2023.

“Price cuts are driving this trend, with four in every five pounds spent on promotional items used on price reductions, rather than multi-buys, which tend to push up basket sizes.”

During its trading update last week, Sainsbury’s cautioned investors that disruptions from the Middle East war could lead to a drop in profit.

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Melissa Minkow, director of Retail Strategy at CI&T discusses what the report might mean for retailers.

The report, titled Retail Tech Reality Check, investigates how artificial intelligence is transforming consumer shopping across the UK and Ireland. It was based on research with 2000 UK and Ireland consumers.

According to the study, 64 per cent of UK&I consumers want retailers to use AI to improve shopping experiences, compared with 58 per cent in the US.

However, the majority of UK consumers still prefer to begin their shopping journey in a physical store for seven out of the 13 consumer categories including groceries, automotives, household goods, personal care items, furniture, pet, beauty.

For home appliances, sporting goods, office supplies, apparel and accessories, electronics and luxury, most consumers preferred to start their shopping journeys digitality.

She explains that consumers want convenience, which is more about saving mental energy than it is about saving time.

She says: “Agentic AI especially allows you to conserve mental energy because it’s outsourcing that whole mental energy process, all of that research, all of the questions you might need to ask and going down those research rabbit holes.”

And retailers with strong search experiences are able to take advantage of this.

Minkow explains retailers are able to get closer to the consumer due to AI as the technology can act as the access point between the brand and the data they are collecting on the consumer.

She says: “So it’s the analysis tool, it’s decision optimisation for the retailers, and it just allows the retailers to be more efficient and understanding with the information they’re collecting on the consumer.”

The data is analysed by AI and then it will assist the retailer to make decisions on what products to push to the consumer.

Minkow says: “We’ve used AI to predict what chocolate flavour we should help a client come out with next and the way we did that was by using AI to analyse patterns in food and beverage trend reporting. Then the employees could look at that and say, okay, this is what we should come out with next.”

“Data mining is what AI does best. So it can help you. It finds patterns, and then can be predictive”.

She explains that in some ways AI can also assist smaller retailers, making them more capable of predictive decisions. However, it does tend to recommend major brands to consumers.

She says: “That’s why TikTok has been so good because it’s democratised algorithm, so you’re not necessarily going to see the top sellers or the top performers from a content perspective. You’re going to see what’s most relevant to you and that’s really what these agentic platforms and just retailers in general, need to be leveraging.”

The report shows around 70 per cent of consumer have bought something directly or indirectly from social media, with Facebook and TikTok being the most used platforms for retail.

She explains that currently retailers are seeing measurable returns from AI marketing investments because AI is a cost reducer. She adds that the real-time nature of it allows brands to protect profit margins and it also doesn’t need a lot of maintenance work.

However, Minkow suggests that there is a learning curve happening with managing bias and errors in AI systems. She says: “We need to just get this technology out the door. It’s iterative. It teaches itself.”

She adds that merchants and merchandise planners are afraid of implementing the technology as they “feel they know how to do things better”.

She says: “Trust isn’t there yet, but once it is, once we see the accuracy in it, which only comes from increased use; its like a self fulfilling prophecy. So it’s circuitous but we’re not there yet, but we need to get there. So we need to roll this out as soon as possible.”

Findings from the study showed shoppers were most worried about data privacy issues, with 83 per cent of respondents reporting that a data breach would impact their shopping behaviours to some extent. It also showed that 47 per cent would temporarily or permanently stop shopping at a retailer after a breach.

She says: “Data privacy was the top concern when it came to AI for consumers, but the second concern was what fascinated me most, and that was about pushing an agenda or biasing the results.

“So what I tell retailers all the time is you need to make sure in your search experience, the sponsored results are separate and very clearly communicated, and that the organic results are what the consumer is understanding they’re getting.

“Because we are very discerning, we are very well informed today in the shopping environment, and we don’t want to feel like we’re being pushed or up sold on certain things by a retailer’s agenda.”

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The research, conducted in partnership with research consultancy Trinity McQueen, found these consumers often underestimated how much they would buy and were committed to making a purchase. They were also more open to guidance from in store advertising campaigns.

As part of the study, the pair conducted post-purchase interviews and accompanied shoppers in three large and three small Co-op stores.

It highlighted that 68% of shoppers visited convenience stores with no set list and shopped with a need in mind, such as “something for breakfast”.

Co-op chief membership & customer officer Kenyatte Nelson said: “Convenience is different and this new behavioural study further supports the importance and influence of small store advertising campaigns.

“We take pride in our expertise in convenience, enabling us to effectively understand the needs of our shoppers and significantly enhance the ROI for the brands that partner with Co-op Media Network.”

In larger stores, data indicated the opposite: there was more planning and less behavioural flexibility when shopping. The research also showed that shoppers at smaller stores would pick up a basket mid-shop after selecting more items than they originally planned.

It highlighted that smaller format stores consumers expected to see new and different brands.

The study found that the first product a customer saw in store influenced their purchasing decisions. According to Trinity McQueen and Co-op Media Network, this challenges current assumptions that shoppers go into store wanting to purchase a certain brand when they need something.

It also highlighted that shoppers felt more committed to making a purchase in small stores, with 88% of consumers purchasing a substitute if their planned product was not available.

Trinity McQueen research director Becki Jarvis said: “Our behavioural study with Co-op shows that convenience store shoppers arrive with fewer fixed plans, greater openness to persuasion, more willingness to experiment and a stronger reliance on in-store to guide their decisions.”

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