119 Co-Innovation Labs. “Their focus is on creating AI agents that connect demand signals directly to replenishment and fulfilment decisions in real time,” says McMahon. “The firm was also named Microsoft Global Independent Software Vendor (ISV) Partner of the Year in 2025 – this was the first time a retail and supply chainfocused ISV won that recognition globally.” Board’s intelligent planning platform applies AI-driven predictive modelling and scenario simulation to merchandise financial planning, which enables retailers to dynamically align open-to-buy, assortment and pricing decisions with real-time demand and financial targets across channels. The platform has improved forecasting accuracy by 10-20 per cent, reduced financial planning time by up to 50 per cent, and enhanced scenario precision by as much as 20-50 per cent. Fractal, which has over 600 Azure-certified engineers, is also developing solutions for AI-driven demand forecasting, customer analytics and category optimisation. Meanwhile, SymphonyAI is applying predictive and prescriptive AI to core merchandising processes, such as assortment, promotions and inventory planning, with users reporting a 3.5 per cent sales uplift, 10 per cent increase in on-shelf availability, and more than $200 million in incremental annual profit. “I’m extremely proud of the depth of leadership we’re seeing in our partner ecosystem,” says McMahon. The biggest obstacle to adopting agentic merchandising is data readiness. McMahon highlights McKinsey research which found agentic AI struggles when systems are fragmented and data is inconsistent. Additionally, research from PwC found 65 per cent of retail executives see data silos as a major barrier to their AI strategies. “Without a unified, clean and well-governed data foundation that connects point-ofsale, e-commerce, loyalty, supply chain and merchandising systems, even the most advanced AI agents will deliver unreliable results,” says McMahon. “That’s why Microsoft Fabric is such a core part of our strategy, rather than an optional add-on. “Organisational readiness is another challenge. McKinsey discovered 61 per cent of organisations are either not prepared or only slightly prepared to scale AI across merchandising, and just 24 per cent of merchants say they receive meaningful AI training from their employers. Technology adoption without proper change management and skills development rarely succeeds in the long term.” McMahon stresses the importance of establishing guardrails before organisations activate AI agents. “Margin thresholds, pricing floors and ceilings, brand standards and vendor agreement requirements must all be codified before agents are given autonomy,” she says. “Otherwise, retailers risk inconsistent customer experiences and reputational damage.” IDC research suggests for every $1 a company invests in generative AI, they receive $3.7. “The economics are compelling for those who get the foundations right,” says McMahon. “The barriers to implementing and adopting agentic AI are real, and the industry does Marks & Spencer deployed 11,000 Microsoft 365 Copilot licences – one for every store manager and support centre colleague in the UK RETAIL & CONSUMER GOODS
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