AI commoditisation narrows retail competitive advantage

Adoption is standardising retail capabilities and narrowing competitive gaps.

Retailers risk losing competitive differentiation as artificial intelligence (AI) tools become commoditised, shifting advantage towards human insight, employee judgement, and emotional customer connection.

Mario Braz de Matos, co-founder and managing partner of Flying Fish Lab, said at the Retail Asia Summit 2026 in Indonesia that companies are investing heavily in AI and automation whilst underinvesting in human capability and consumer insight research.

“As the technology commoditises, everyone has the same capability,” Braz de Matos said. “What will set you apart? It’s not your agent. I can copy your agent. I can copy your app.”

He said AI tools are reducing barriers to building digital platforms, citing an internal example where a crowdsourcing platform was built in 10 hours compared with three months and about $117,560 (EUR100,000) previously.

Retailers are becoming “data-rich but wisdom-poor” by relying on dashboards, predictive models, and analytics without understanding the reasons behind customer behaviour.

“Data tells you a product isn't selling. Insight tells you the packaging feels cheap in the hand,” he said, further explaining that data shows what happened, whilst information helps explain why it happened.

He said AI can optimise transactions and supply chains but cannot replace empathy, intuition, or emotional understanding.

“AI is brilliant at the transaction, but it's bankrupt at the relationship,” Braz de Matos said.

He also warned that overreliance on algorithmic decision-making could weaken employee judgement and critical thinking across retail organisations.

“When you outsource intuition to machines that don't have intuition because they are mathematically built formulas, then the result is teams that operate without critical thinking,” he said.

Braz de Matos said emotional connection and brand trust remain key drivers of consumer loyalty in Indonesia, whilst digital convenience ranks lower.

“The future belongs to human-in-the-loop retail,” he said. “Use AI for all the things that we can leverage because it will be the heavyweight lifting of the work that needs to be done. But keep a human-centric approach when it comes to empathy.”

He said retailers should focus on empowering frontline teams to challenge algorithmic outputs and strengthen customer understanding through direct interaction rather than relying solely on surveys and dashboards.

“The brands that will dominate in the retail landscape in the future are not the ones that have more data, but the ones who can use it to free up their people to do what machines can never do: connect, empathise, take bold, irrational, deeply human leaps of faith,” Braz de Matos said.

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