Meanwhile, AI and other tech advancements have raised the bar for speed, convenience, and personalization. But most service platforms were designed for another era.
The gap between what shoppers demand and what retailers can deliver is widening. And the stakes for loyalty and revenue have never been higher.
CLOSURES ARE ACCELERATING THE PRESSURE
At the same time, up to 15,000 U. S. retail locations are projected to have shut down in 2025: more than double last year’ s total.
That leaves the burden of customer interactions squarely on digital channels. Yet many contact center systems remain optimized for speed and volume rather than empathy and continuity.
In an online-first world, that gap is glaring: customer context- past orders, loyalty status, in-app behavior- often vanishes the moment a shopper switches channels. Agents are left without visibility, and trust erodes at the exact moments when retailers can least afford it.
THE NEW FRAGILITY OF LOYALTY
Yet a shift to digital-first service has made loyalty harder to hold onto than ever. Today, a single frustrating experience can turn a customer away: and younger generations are leading the charge.
According to Salesforce data cited by an eMarketer article,“ Brand loyalty is fading among Gen Z and millennials”, 81 % of Gen Z and millennial consumers switched brands in 2024: showing how quickly poor experiences now drive churn.
And according to our analysis, nearly half( 46 %) of customer experience( CX) leaders say mobile-friendly service will influence buying decisions: more than AI support, empathetic agents, or short wait times.
22 CONTACT CENTER PIPELINE
While older cohorts still place a higher value on agent empathy and shorter wait times, their expectations are converging with those of younger shoppers as digital becomes the default.
This generational shift and convergence means the tolerance for outdated, fragmented experiences is shrinking every year. What once might have been forgiven- restarting a conversation across channels or waiting days for a resolution- now costs retailers real revenue.
The problem is that most journeys still break down at the seams. Customers who begin returns in an app often must start over when they switch to voice. Agents ask repetitive questions because loyalty, purchase, and service data remain siloed.
In an era where shoppers expect instant, personalized support, that disconnect makes even the most advanced AI tools feel outdated. And with Gen Z and millennials shaping the next era of retail spending, the cost of falling short today will only grow.
AI: COST-CUTTER OR CUSTOMER SUPPORT?
Many retailers are turning to AI, even in the face of it not being as important as other factors in driving customer loyalty. That is because it promises instant support, smarter routing, and improved personalization at scale: the very things legacy systems have failed to deliver.
But in practice, AI is too often treated as a cost-cutting tool to replace agents rather than a way to close these gaps. This approach has already led to layoffs and hiring slowdowns, with AI-related workforce reductions up nearly 300 % in 2025.
According to our analysis, 60 % of AI deployments in the contact center remain“ low maturity,” limited to basic tasks, and disconnected from broader strategies. The result: more bots, fewer people, and no real gains in customer satisfaction.
The risk is bigger than wasted investment. Poorly implemented AI can frustrate customers with endless loops, lead to increased churn, and even introduce bias or privacy concerns if training data isn’ t managed carefully.
Yet there is a powerful opportunity for AI, especially in retail customer service. It lies in using AI to support, not replace, the human element.
THE INCOME DIVIDE AND RETAIL SERVICE
The reportedly widening income divide is driving several shifts in customer profile and expectations. It is also affecting contact center wages and turnover.
For luxury / premium retailers, the focus is on more white-gloved service, strong personalization, and prompt expert resolution for the high-value customer base.
Contact centers serving this segment need contact center agents with high emotional intelligence, deep product knowledge, and sophisticated communication skills. These are needed to handle complex issues related to expensive goods, customized orders, or premium member services.
For value / discount retailers, the focus is efficiency, self-service, and high-volume transactional support with a focus on quick answers.
These contact center agents handle a higher volume of simpler inquiries. There ' s a greater push for AI and automation to manage volume and control costs.
But this concentration of retail revenue at the top and squeeze at the bottom further exacerbates wage inequality within the contact center industry itself.
Specialized agents supporting premium bands command higher salaries, while high-volume centers for value retailers may struggle more with wage pressure and higher turnover.
When deployed well, AI can:
• Surface order status instantly, pass context seamlessly to a live agent, and free that agent to solve the real problem.
• Spot patterns in support data that predict churn or trigger proactive outreach before an issue escalates.
Real-time agent assist tools can now guide staff through next-best actions, like saving an at-risk customer or handling a renewal.
By helping agents drive revenue and resolve issues, these tools show that technology can enhance, not replace, the human touch, laying the foundation for reinvention.