Fragmented data infrastructure slowing down AI deployment in Malaysia's retail sector

Most retailers are still in the experimentation stage rather than full transformation.

Malaysia’s retail sector is accelerating artificial intelligence (AI) adoption, but fragmented data infrastructure and uneven organisational readiness continue to slow full-scale deployment, according to industry leaders.

Ngu Heng Sing, partner – transaction services & head of consumer & retail sector at KPMG in Malaysia, highlighted strong global momentum in AI investment amongst retail leaders. “Sixty-four percent of global CEOs from retail and consumer organisations have AI as a top priority investment,” he said during the panel discussion at the Retail Asia Summit 2026 in Malaysia.

AI is increasingly seen as a competitive differentiator across the industry, he said, noting that about 82% of retail executives believe that retailers who embrace AI will significantly outperform those who do not.

Ngu also said that Malaysia is benefitting from national-level digital initiatives, including the national AI agenda and the establishment of the National AI Office, which are helping accelerate adoption across sectors.

However, despite this momentum, industry leaders said the retail sector remains uneven in its readiness for AI deployment.

Khazalin Ghuzal, chief retail officer of Pos Malaysia Berhad, said the industry is operating at two different speeds. “Malaysia retail landscape today, I think we're beyond experimenting, but I don't think we've seen real transformation across the board.”

She said front-end digitalisation such as e-commerce and omnichannel retail has progressed, but backend systems remain constrained by legacy infrastructure and fragmented data systems.

“Data is quite fragmented, and the cost structure is still complex and still legacy,” she noted.

Ghuzal added that declining footfall across physical retail networks is forcing companies to rethink operating models.

To respond, Pos Malaysia has been experimenting with new business models, including its convenience retail concept PoShop.

Whilst the initiative has helped generate additional footfall and attract younger customer segments, Ghuzal said it has yet to significantly shift the overall business trajectory.

From a healthcare retail perspective, Yen Thng (Ostwin) Paw, Sustainability & Impact Officer at Alpro Pharmacy and CEO of Alpro Foundation, said experimentation is essential to understanding AI’s impact.

“You have to experiment first, and then we see what the impact is,” he said.

Paw highlighted AI use cases in preventive healthcare, including retinal scanning tools used to detect early risks of diabetes, hypertension, and cognitive impairment.

However, he stressed that AI remains a support tool rather than a replacement for human roles. “AI is going to assist us. It's not to replace us.”

Paw added that AI is also being used to improve internal communication and operational efficiency across pharmacy networks.

Lim Yau Young, corporate strategy officer at Senheng Electric (KL) Sdn Bhd., said Malaysia’s retail sector is highly fragmented in terms of AI maturity.

“At one end of the spectrum, we have retailers that are very advanced in adoption of AI. And at the other end of the spectrum, we have retailers that are very traditional, have made probably not even the first step, into technology or data,” he said.

Young stressed that data readiness remains the most fundamental requirement before AI deployment. “Before we even look at AI, we need to look at how much data we are even doing.”

He explained that organisations typically progress from data foundation-building to experimentation, and eventually to advanced AI use cases such as forecasting, customer analytics, and workforce optimisation.

Young also highlighted AI’s role in scaling employee training and operational support through virtual learning tools.

Despite rapid progress, he warned that the fast pace of AI innovation creates ongoing uncertainty in technology selection and long-term investment planning.

“AI is really at a very, very fast pace, and every day we see new AI solutions popping up,” said Young.