AI's Impact on Retail and Consumer Behavior

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2:04JPMorgan Chase and Company. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevec on Bloomberg Radio. All right, we do want to talk a little bit more about artificial intelligence and how it could influence the retail sector in the coming year. Our next guest says AI-driven traffic to retail sites this holiday season surged by 520 % over last year. So what does it mean? Let's ask Kimberly Schenk. She is CEO of Novi. It's a firm that uses AI to help connect brands with retail customers. Kim, great to have you here with Vani and myself.

2:44Tell us a little bit more about your company and what exactly the role of AI to connect customers. what actually happens? Is it chatbots? Is it something more?

2:53Kimberly Shenk:Thanks so much for having me. Yeah. So Novi's technology, we're actually helping retailers and brands increase their sales by ensuring their products are found and trusted and then ultimately recommended by AI models. So think ChatGVT, Gemini, and Claude. And so we do this. We work with leading retailers, including Macy's, Sephora, Target, Ulta, thousands of CPG brands, and they rely on us to optimize their product data for AI-driven discovery by consumers. So when you say that, it's basically a consumer who does something and their data is processed and recorded and they're saying, oh, you bought that pair of pants?

3:26Maybe you would like this pair of pants. Is it as simple as something like that or is it more sophisticated?

3:31Kimberly Shenk:It's a little bit different in terms of consumers now flocking to ChachiBT or Gemini and asking questions to actually do their shopping. So they're outsourcing a lot of their research, discount hunting, personalized gift curation to the AI agent who's then going and finding products and recommending it to them based on just questions and prompts. So who are your competitors and how do you stand out from them? It's interesting. So there's a couple of different up and coming competitors in the tech space who are helping brands and retailers stand out in AI shopping. But we also have a lot of the older, more traditional data companies because we are a data company and we feed data through our partnerships with our retailer partners.

4:13Kimberly Shenk:So think about Syndago or Salsify or even Nielsen IQ. some of those older data partnership players. And how then do you get the edge over them? Yes. So a lot of what we're doing in these partnerships, and we'll be able to announce some of them really soon, is feeding trustworthy, personalized information to the models themselves, which is what we have seen at Novi to increase your potential as a brand to show up in AI shopping. So we found that products that have verified trust signals are selected 259 % more often than random chance. So think like certifications, reviews, badges, third-party testing.

4:49Kimberly Shenk:And we're feeding this directly to the retailers and the models so that they help the brands show up in AI recommendations to consumers. So one of the things I always think about, Kim, is like how much of what is spent on AI to kind of attract consumers, retailers, or folks to retailers. So in other words, that AI-driven traffic to retail sites, how much of it is productive that results in actually a consumer buying something? Yeah, that's actually a very interesting question. So we're seeing the traffic start to increase. There's actually, we saw from Adobe Analytics, like we just said, 520 % over last year from AI.

5:28Kimberly Shenk:But what we're not sure about yet is conversion. And this is just because ChatGPT, Gemini, none of them are publishing the conversion results. But we at Novi, what we did see is that ChatGPT's shopping research answers sent consumers directly to the brand's website 86 % of the time, which means that the remainder of traffic, you know, only about 14 % was sent to the large retailers like Walmart or Target. And so what brands are starting to see is more and more direct consumer traffic to their website, which is driving conversion and sales for them. Interesting. Okay. So would you say based on the data that you see, because you see so much data that the consumer is doing well, that retail is doing well, like how much can, you can obviously break it down probably a lot.

6:08So give us a little bit of insight as we get ready to wrap up this holiday shopping season.

6:13Kimberly Shenk:Well, so what we're actually seeing is, you know, consumers are using AI as their category manager. So think of it as we all used to trust the big box retailers for their ability to manage each shopping category, do the curation for us. And that's why you walked into a target, right? They scoured the earth for the best, most compelling products, and we trusted them to do that. But now, and what we saw play out this holiday season, the consumer has shifted their trust to AI to do the research and curation for them. So we're seeing strong numbers in users using ChatGPT and shopping, but it's just not quite played out yet.

6:46Kimberly Shenk:And we'll see that in 2026 is where that conversion is going to happen, if it's going to happen direct on the brand websites or still in retail. Kimberly, just a word on yourselves. How difficult is it to raise money? What are the key words that investors are looking for these days and, you know, the key ideas? Yes, AI is definitely the hot topic. If you are not involved in AI, doing something future with your company that's progressing AI. So, for example, we're an agentic commerce. That is what is hot for investors these days. And that's what is raising money and getting the majority of the capital in Silicon Valley.

7:21Well, the very best of luck. It sounds like a fantastic endeavor. And I know you have a lot of experience. So I think if anybody can continue to do it, you certainly can. That is Kimberly Schenck, CEO of Novi.

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