120 FEATURE itself a disservice by talking only about the opportunities without also being honest about the challenges.” Despite these challenges, McMahon predicts merchandising teams will become more strategic over the next three to five years, with AI agents taking responsibility for data-heavy operational tasks while humans focus on commercial judgement, supplier relationships and brand direction. “My strong belief is that the merchant role becomes more valuable, not less,” says McMahon. “The merchants who thrive will be those who can direct AI agents strategically while applying commercial and cultural judgement and building the supplier and customer relationships that agents cannot.” According to McMahon, this shift will create entirely new specialisations. Roles such as ‘category intelligence merchant’ and ‘assortment integrity lead’ will emerge to bridge AI-driven insights with brand governance, supplier requirements and category strategy. “These are genuinely new roles that will become important quickly,” she says. The pace of merchandising decision-making is also expected to change dramatically. Merchants will increasingly work from continuously updated AI-generated recommendation briefs synthesised from overnight sales, inventory, weather and customer data. “The merchant’s job is to interrogate, refine and approve,” says McMahon. “Instead of a Monday morning report, they’ll receive an AI-generated signal brief that has already identified priority actions and ranked them by commercial impact.” McMahon says Microsoft is particularly focused on innovative AI agents. “One of the areas that excites us most is multiagent orchestration, where agents across merchandising, supply chain, store operations and customer service communicate and collaborate in real time via open protocols,” she says. Microsoft is also investing in what McMahon describes as “digital store intelligence”. Through its collaboration with retail technology company Vusion, Microsoft is exploring how real-time digital representations of physical stores could allow merchandising decisions to be tested and adjusted dynamically at shelf level. Looking ahead, McMahon believes the concept of a retail frontier firm – an organisation that combines human expertise with AI agents to improve efficiency, accelerate growth and create new value – is closer to reality than most think. “The technology is ready, but the question is whether retailers are willing to invest in the data foundations, the change management and the upskilling to unlock it,” says McMahon. “The goal of agentic merchandising is to give merchants back the time and headspace to do what they do best. Retail has always been a human business at its heart: the relationships with suppliers that unlock exclusive product, the trend intuition that identifies a whitespace in the market before the data confirms it, and the brand sensibility that makes a curated assortment feel intentional rather than algorithmic. These are deeply human capabilities, and they become more valuable as AI takes on the data-intensive work that has historically crowded them out.” “ The technology is ready, but the question is whether retailers are willing to invest” Photo: iStock/monkeybusinessimages
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