While larger retailers embrace AI to boost productivity and customer engagement, one-in-10 independent brands in the market are steering clear. Retail Systems senior reporter Silvia Iacovcich explores why some smaller businesses remain hesitant.

While most large retailers are embracing the latest AI advancements, with companies rolling out everything from genAI chatbots, virtual assistants and agentic AI to AI-powered forecasting, security, and workforce support, many of their smaller counterparts are less certain about adoption.

The gap is narrowing, with a survey of 300 small British retailers conducted by online wholesale marketplace Faire revealing that 83 per cent have started using the technology in some form.

While adoption is on the rise, many companies are still trailing behind, with only a third using it daily and one in 10 claiming to have no interest in AI at all.

Major UK retailers such as Tesco, M&S and Asos have ramped up their AI adoption to boost the customer experience and streamline operations, demonstrating that automation and intelligent systems are becoming essential tools in the retail landscape. In contrast, many smaller firms often feel AI might be “too big” for them.

According to Sindy Foster, chief executive of furniture and home accessories platform MySmallSpace, these companies are perpetuating one of the biggest misconceptions in the market – that AI is only relevant for large retailers with deep pockets and complex infrastructures.

Big vs small

“Most independent retailers still see AI as something for ‘big business’, largely due to a lack of awareness around accessible solutions and how these tools can deliver real ROI,” Foster tells Retail Systems.

While AI doesn’t always mean robots or advanced automation, independent retailers might still see it that way.

“Some of the most powerful uses, such as personalised product recommendations, automated tagging, or demand forecasting can actually be implemented on a much smaller scale,” continues the chief executive.

A Forrester Research study from last year also found that while retailers are enthusiastic about AI, many struggle with the technical expertise necessary to adopt it effectively. This is particularly true for smaller retailers, who worry about complexity and whether they have the technical know-how to implement and manage AI.

With AI being available on the market in numerous software options, small retailers can feel overwhelmed by choice, fearing that the technology may be out of reach as they search for the right tool, hampered by the fear of missing out and falling behind the AI wave.

“Many independent retailers know they should be doing something with AI, but they just don’t know what, how, or where to start,” says Jonathan Friedman, managing director of independent women’s clothing retailer BeigePlus. “Cost matters, of course, but uncertainty and lack of clarity are far bigger barriers.”

While concerns about costs are common, some of the fear is born from comparison to larger corporations pouring millions into the technology.

“Cost is certainly a factor, but it’s often a perceived cost more than actual cost that causes hesitation,” Foster explains.

Additionally, smaller retailers might often lack time or resources to explore or test new tools, especially if they don’t understand the technical aspects behind it.

According to Foster, most small retailers currently operate with fragmented systems such as manual spreadsheets, legacy POS, or out-of-the-box e-commerce set-ups, which complicates AI integration as it requires some degree of data cleanliness and interoperability.

“Many independent retailers simply don’t meet these conditions,” she argues.
There’s also fear of disruption.

“Will AI break my checkout? Will I lose data? These are very real concerns for a small team with limited IT support,” Foster adds.

BeigePlus’s Friedman agrees: “If it’s not plug and play, it’s too difficult. If they don’t understand it, they fear it.”

Lack of time

Time is another major obstacle among independent retailers.

“Learning or integrating any new technology needs ‘time’, which most independent retailers struggle with,” Foster explains.

Charlotte Broadbent, general manager at global wholesale marketplace Faire agrees: “Exploring AI tools feels like a luxury when they're already stretched thin.”

According to these experts, outsourcing hasn’t always helped, as vendors in the rapidly developing AI sector often overpromise and under-deliver, which makes smaller businesses cautious.

“Anything custom or bespoke is going to cost time and money, which aren’t in infinite resources in the independent retailer sector,” Foster explains.

Preserving authenticity

Many smaller retailers are also simply not willing to risk losing authenticity because it is was differentiates them from larger competitors.

Kate Tompsett, the owner of gifts and homewares specialist retailer Happy and Glorious, explains: “There is an understandable fear of the unknown when it comes to AI. We pride ourselves on using our unique voices, and the thought of moving away from that is challenging.”

With the expansion of chatbots, most independent retailers are worried that AI interactions with customers are simply inferior to interactions with human team members.

“Some retailers view AI as a threat to their authentic brand identity, fearing it might make their communication sound robotic or impersonal,” Faire’s Broadbent explains.

This concern is rooted in the personal efforts small retailers have built with their customers over the years.

Natasha Hogg, digital director at luxury clothing retailer Caramel shares that while the retailer uses ChatGPT internally for tasks like real-time translations, they remain cautious about fully adopting AI in customer service.

“We all had frustrating experiences as customers, so the industry segment that prides itself on service excellence is understandably cautious,” Hogg explains.

An ethical choice

Broadbent points out that many independent retailers’ hesitation also reflects strong ethical values. This can often lead to them avoiding innovative solutions out of strong values rooted in areas such as sustainable sourcing, fair wages and working conditions.

“These business owners are motivated by a desire to create personal, meaningful customer experiences rather than just making sales,” she explains.

She points out that on Faire’s platform, filters like “not on Amazon” and “eco-friendly” are frequently used, demonstrating independent retailers’ commitment to ethical and sustainable business practices.

“Having survived turbulent economic times, these retailers have developed a thoughtful, principled approach to business changes,” explains Broadbent. “They're not just looking to maximise profits, but to maintain their unique identity and values.”

For this reason, their careful consideration of new technologies such as AI stems from this fundamental characteristic: a genuine commitment to preserving the authentic and personal nature of their activities, where scalability and rapid technology adoption are not always the priority, Broadbent argues.

It’s not a priority

While upcoming regulatory changes could help address these ethical concerns and standardise AI, some retailers argue that AI is not seen as a priority by many due to current geopolitical tensions, leading retailers to focus on priorities such as handling cross-border trade in the context of changes to US tariffs and formal clearance procedures.

Caramel’s Hogg says: “With economic and political challenges, other areas like cross-border commerce are seen as more urgent priorities and investments.”

Exploring AI

To solve the indecision of independent retailers, many experts advise them to go exploring.

Caramel’s Hogg emphasises that modern AI tools are remarkably user-friendly, requiring no specialised technical expertise.

She notes that many AI-powered AI tools are now build into platforms retailers already use, such as Spotify or Wix, meaning smaller retailers are already paying for access without leveraging the full potential of the technology in their hands.

Hogg points out that AI tools are designed to be intuitive, making them approachable for independent retailers with limited resources and technical background.

“These tools are democratised and accessible to everyone, which is evident from the growing uptake among retailers,” Faire’s Broadbent explains.

As AI tools continue to multiply, experts also advise independent companies to take time to consider what they need AI for.

“A search for an AI tool should always start with a clear awareness of the solution required and how it fits into the wider business strategy,” explains Hogg. “There is no one-size- fits-all strategy but asking a question like ‘is there a better way to do this’ is a great starting point on the road to AI tool discovery.”

Happy and Glorious’ Tompsett encourages a hands-on, exploratory approach.
She says: “I received no training or advice but found what I needed by being willing to experiment with different platforms, trying different prompts, and basically spending some time playing with it.”

She adds that the firm uses AI mostly for sense checking documents and to help them restructure product descriptions, adopting a trial-and-error technique to find other helpful technologies.

Faire’s Broadbent suggests retailers begin by using AI for simple, low-stakes tasks to see tangible results.

For example, using AI to draft a newsletter can reveal time savings ad improved engagement.

“The goal is not to completely transform their business overnight, but to take incremental, manageable steps,” she says. “By trying AI in small, controlled ways, retailers can build confidence and see practical benefits without feeling overwhelmed.”

Mikhel Ruia, managing director at golf clothing firm Glenmuir, agrees.
The retailer uses AI to craft meta descriptions, auto-tag imagery, and improve product listing imagery, without replacing human judgment.

“The misconception that AI must be revolutionary is what’s holding many back—it’s often more evolutionary and practical than they realise,” Ruia explains.

AI as an investment

After all, the returns of adopting AI are already evident.

According to research by Faire, retailers could save up to £20,000 annually by streamlining tasks like email management and photo editing.

“If more independent brands understood how incremental AI improvements could benefit product visibility and engagement, adoption would grow organically,” Ruia adds.

And when indecision immobilises retailers, associations and organisations can make a difference.

“I feel that there are now more free training opportunities becoming available, such as the ones offered by champion of small businesses Small Business Britain, and hopefully this will lead to more people feeling comfortable with AI,” Tompsett says.

AI is here to stay

While retailers agree AI is here to stay, views differ on what’s next.
Caramel’s Hoggs sees e-commerce evolving with AI, especially through platforms like ChatGPT and in-platform checkouts.

“AI is already changing our approach to SEO strategies: users no longer have to click on a link to find the information they are looking for, as Google’s AI summarises an abundance of information in a clear summary,” she says.

Foster agrees, stressing the impact of case studies, like a furniture brand increasing sales by 15 per cent by using AI for better SEO.

BeigePlus’ Friedman predicts AI-driven communication including handling orders and support, will become a ‘must-have’ innovation.

Glenmuir’s Ruia thinks AI-powered content creation and personalisation tools will likely see the broadest adoption, especially those built into platforms like Klaviyo, Shopify, or Meta.

“Retailers selling apparel can benefit significantly from product recommendation engines, email segmentation, and dynamic content that adapts to user behaviour, and these are practical, accessible applications of AI that directly impact conversion and customer satisfaction,” he explains.

Across the global marketplace Faire predicts that in just six months we will see even more creative and innovative uses of AI in retail.

“AI is not as a threat, but as a superpower that can help small, independent retailers level the playing field against larger competitors,” Broadbent concludes.

While AI adoption is on the rise amongst small retailers, hesitancy still remains. Some are concerned about the cost and expertise required to adopt AI, with others avoiding the technology in a bid to maintain authenticity.

Smaller companies must also prioritise what they invest in and where they focus their time, with challenges such as changes to US tariffs at the forefront of many working in the market.

But many independent brands have started exploring new tools, adopting the technology to enhance their e-commerce and marketing strategies and increase personalised customer experiences.

As AI continues to reshape the retail landscape, those that are holding back on investment in the technology will continue to miss out on its transformative capabilities.

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