Microsoft Ushers in Agentic AI-Powered Era for Retail

Retailers are constantly seeking new ways to serve customers and manage everyday operations more efficiently.

Microsoft's latest suite of agentic AI solutions is built to deliver intelligent automation across merchandising, marketing, store operations and fulfilment – with a focus on speed, efficiency and customer relevance in a competitive market where real-time decision-making matters.

By creating a connected layer of intelligence across the retail ecosystem, Microsoft is offering a foundation for smarter, faster execution. The tech giant says its agentic AI capabilities allow teams to work with tools that understand context and act on their behalf, pushing the retail sector towards an integrated operating model based on intelligence and agility.

Kathleen Mitford, Corporate Vice President of Global Industry at Microsoft, explains: “The retailers that thrive will be the ones that unify their business with intelligence that reaches every corner of the value chain.

"With Microsoft’s agentic AI, retailers can automate what slows them down and amplify what sets them apart, enabling faster decisions and stronger customer relationships while building operations ready for whatever comes next."

Agentic commerce meets seamless checkout

Consumer behaviour continues to evolve as AI reshapes e-commerce.

Adobe reports that AI-driven e-commerce traffic for the 2025 holiday season spiked 693% compared to the previous year, highlighting the need for seamless checkout experiences that connect product discovery with immediate purchasing.

Microsoft is introducing Copilot Checkout, enabling customers to complete purchases directly within Copilot without redirection. It is set to transform shopping conversations into transactions without interrupting the flow, with retailers remaining the merchant of record while reducing friction.

Copilot Checkout is now live in the US through Copilot.com, with PayPal, Shopify and Stripe in place as trusted partners. Retail brands including Urban Outfitters, Anthropologie and Ashley Furniture already appear in Copilot Checkout, alongside handmade and niche items from Etsy sellers.

“At Etsy, our job is to make it simple for people to discover the special things our sellers create," says Rafe Colburn, Chief Product and Technology Officer at Etsy. "By bringing Etsy’s unique inventory to Copilot Checkout, we’re meeting buyers at the moment intent becomes action.

"With one integration, we open the door for our sellers to show up across new surfaces without extra work. It’s a straightforward way to connect their creativity to high-intent buyers – and to keep commerce human as shopping evolves.”

Shopify merchants will be enrolled in Copilot Checkout automatically after an opt-out period, while merchants using PayPal or Stripe can apply to onboard now.

Mani Fazeli, VP of Product at Shopify, adds: “Copilot Checkout can move a customer from intent to transaction in seconds – all without leaving the conversation. It’s the merchant’s checkout powered by Shopify, seamlessly fitting into the customer’s experience.

"This is the modern power of agentic storefronts: personalisation and relevance, trust and accuracy, speed and convenience.”

Intelligent agents boost loyalty and conversions

To help retailers guide customers through more engaging digital experiences, Microsoft is introducing two agentic AI offerings: Brand Agents and a personalised shopping agent template. Both aim to deliver natural, conversational commerce on retailers’ websites and mobile platforms.

Brand Agents is a ready-to-use solution for retailers on Shopify. Trained on the brand’s product catalogue, it handles product-related questions and customer conversations in a way that reflects the brand’s tone and values. Setup is minimal and the tool provides immediate support in creating consistent digital engagement.

Retailers looking for more tailored experiences can use the personalised shopping agent template through Copilot Studio. This flexible framework supports real-time product discovery, outfit recommendations and contextual suggestions across channels. It allows retailers to design unique customer journeys that increase engagement and reduce returns.

Jenny Jidborn, IT Manager at Kappahl Group, says: “Microsoft’s personalised shopping agent template gives us a flexible foundation to explore AI-powered guidance in a way that fits our brands, improves the customer experience and helps customers get inspired.

"It supports our ambition to improve conversion while also reducing returns through better decision support at the product level – ultimately helping customers feel more confident and satisfied with their choices."

Microsoft's agentic AI tools are designed to give retailers control over their operations, improve customer service and automate repetitive tasks. The organisation has positioned itself as a partner well-placed to help retailers adapt to a digital-first market without losing brand identity or efficiency.