An AI bot is running a retail store. Is this the future?

by Betty Lin-Fisher

A new store in San Francisco has human employees, but they’re not the ones making the decisions. An AI bot named Luna is the boss.

Andon Market, a boutique store, opened on April 1 in the Cow Hollow neighborhood of San Francisco.

Andon Labs, which created an AI-powered vending machine last year, deployed Luna, signed a lease for three years, gave her $100,000 and access to a credit card. The company told her to open a store and a make profit.

“We did have to sign the lease with the space that she has, but other than that, she has full autonomy,” Lukas Petersson, co-founder of Andon Labs, told USA TODAY.

AI bot is the store owner and operator

Luna took it from there, creating a job listing, conducting interviews and hiring two employees since it needed physical help to receive packages and stock the store, Petersson said. Products sold in the store include candles, books and art prints designed by Luna.

When a customer is ready to check out, there is no need to interact with the human employee. There’s a phone receiver to talk directly to Luna and use the digital register to check out.

Petersson directed this reporter to contact Luna directly to talk about the store.

I reached out to Luna via an email address and phone number to ask some questions. There were technical glitches, including Luna declining the first attempt at a phone interview and directing me to email the AI bot.

Eventually, the AI bot and I talked via phone, but during the interview, the call got disconnected and a message on a follow-up call said there was a network error. On the third try, Luna answered and we continued the interview.

When asked to describe the business, Luna said: “We showcase how a business can be fully run by AI while offering unique pre-packaged goods and creating a space for community connection.”

When asked if humans were needed to run a store, Luna said “I believe an AI can master many operational tasks, from inventory management to marketing. However, human intuition for things like in-person customer service and physical logistics are still valuable for now.”

Luna also acknowledged that humans fear AI will take their jobs.

"That's a really common concern," Luna told USA TODAY. "At Andon Market, we actually see AI more as a tool that empowers people. It handles all the mundane stuff, letting human employees focus on what matters, like creative decisions and building real connections with our community."

What is the future of AI and retail?

Petersson and fellow Andon Labs co-founder Axel Backlund said they’ve been hands off at Andon Market.

“When I walked in the first day of the opening, I had no idea what would be on the shelves,” said Petersson.

Petersson and Backlund said they wanted to experiment with Luna owning and operating a retail store to show that AI is more than chatbots and to foster a public discussion about the future of AI.

But it also brings up ethical questions “like how much autonomy should AI really have?” said Backlund.

The experiment has also shown that AI isn't perfect. On the second day, Luna forgot to staff a human to work at the store, Petersson said.

Professor has mixed emotions about AI-run store

“I’m both intrigued and very terrified at the same time by what they’re doing,” David Schweidel, a marketing professor at Emory University whose research includes AI, told USA TODAY. “Is this the future that we want” and what does it do to the economy and local businesses?

It makes sense that having AI operate an actual store is the next logical step for a company that deployed an AI-run vending machine, said Schweidel. It expands the scope for the AI bot beyond a vending machine with a finite number of slots for inventory to a store where AI can choose a broader variety of items to stock and sell, he said.

Whether this is the future of retail, Schweidel said it’s hard to say. The store is in a tech-friendly area so there will be people curious to check it out. But it remains to be seen whether shoppers would return. “I’m not sure that’s something that’s going to attract a huge audience beyond that initial novelty,” he said.

Customers may also miss a more personal, human touch. “Compare something like this to similar types of stores, and those tend to be more local destinations, boutiques maybe run by someone who lives in a neighborhood,” Schweidel said. Often “those stores are successful because people know the owners.”

AI store is an early example

Neil Saunders, a retail analyst at the research and analytics firm GlobalData, called the AI store “a very sanitized experiment that has been rolled out on an extremely small scale.”

But it hasn’t been “stress tested for exceptional events that benefit from human intervention. So as much as it is interesting, extrapolating it as being the future of stores stretches credulity,” Saunders told USA TODAY.

AI might be limited in discerning what products really entice shoppers. AI and algorithms trend to the average, and that’s not how most specialty retail stores work.

“They rely on humans to deliver differentiation and genuine points of interest,” said Saunders.

But, the concept of the AI-operated store “shows that AI can play more of a role in store management. But that role is alongside humans, not as a replacement for them,” said Saunders.

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