Why Europe’s most promising AI startups are betting on retail
No matter which retail executive you talk to, the reaction is the same: “I didn’t think that was possible yet.” While most headlines in tech are dominated by copilots, a quieter but deeper shift is happening in enterprise AI: the rise of agentic systems that don’t just assist, but act. And it’s catching many executives off guard.
It shouldn’t catch the startup bubble off guard, because the retail industry is a chance to hop into a $27 trillion global market.
A goldmine of data and missed decisions
Retailers are sitting on a goldmine of data, yet most decisions are still made via Excel or on fragmented systems. Every supermarket shelf or online shop reflects thousands of individual choices: what to list, how to price, what to discontinue. These decisions shape both customer experience and profit margins. Click into any webshop and you’ll see it: endless products, irrelevant suggestions, or out-of-stock bestsellers. Shoppers don’t find what they want or what they saw trending on social media the night before.
Agents that understand the shelf
This is where agentic systems step in. These agents take retailer’s business goals into account, combine them with assortment data, competitor and market data as well as social trends to propose concrete actions: remove underperforming products, highlight trending substitutes, reposition private label, lower the price.
In live pilots with major European grocers, agentic systems have delivered margin uplifts of 3-5% by optimising assortments with AI.
Built for enterprise complexity
Unlike copilots, which support individual users, agentic systems are built for enterprise complexity. They ingest fragmented inputs, act across categories, and close the gap between strategy and shelf. They’re also industry-agnostic: whether it’s food, fashion, or DIY, the same principles apply.
And retail is proving to be an ideal testbed for this kind of automation. It’s one of the most data-rich, operationally complex and margin-sensitive sectors in the world. Every decision is high frequency and high impact. Assortments constantly shift, trends evolve overnight, and legacy tools can no longer keep up. Studies show that 40-60% of SKUs are unproductive. Yet they stay on the shelf, wasting space and capital.
What happens when AI fills the gaps
A recent analysis in facial skincare revealed that over half of products lacked a suggested alternative. When one went out of stock, the shopper simply left. Agentic systems filled these gaps with substitutes based on ingredients, skin type or pack size. The result: higher conversions, happier shoppers, stronger margins. It is as easy as it sounds.
What makes this shift so urgent is the cost of inaction. Shopper expectations around price and relevance are increasing. Private label is surging. Social media shortens product cycles. And most retailers are still too slow to react.
That’s why Europe’s new wave of AI-native startups are betting on retail. It’s where the data is deep, the use cases concrete, and the commercial upside immediate.
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