The next retail battleground could be AI recommendation engines, according to UBS More shoppers are turning to AI tools like Claude and ChatGPT for shopping advice, and these chatbots appear likelier to recommend physical-store chains Walmart and Costco over Amazon.com, a UBS analysis found. Analysts at the firm detailed their findings in a research note on Monday, as AI search becomes a bigger competitive front for brands fighting for consumers’ attention, and as some retail and restaurant chains try to collaborate with the biggest AI platforms. The analysts based their findings on 12 questions, such as where someone should shop for the lowest grocery prices this week, where to get household essentials and where to could get the cheapest car battery.
The analysts plugged those prompts into ChatGPT, Claude, Gemini and Muse in three different states: New Jersey, New York and Minnesota. The analysis, they said, was intended to gauge which retailers AI tended to associate with different consumer needs. The analysts’ findings, they said, indicated that the AI models “consistently gravitate toward scale, value, convenience and brand familiarity.” One clear winner emerged: Walmart .
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Costco was also consistently a top recommendation from the chatbots — albeit for things like quality and bulk purchases rather than convenience, the analysts said. The analysts said the fact that Costco turned up so much in the chatbots’ recommendations meant that the membership retailer’s popularity had become “deeply embedded within the information ecosystem from which AI models learn.” However, the analysts also said that e-commerce giant Amazon — which like Walmart and Costco has emerged as a refuge against inflation — turned up less often than expected. Analysts over the past few years have said that mass retailers, like Walmart, Costco and Amazon, stood to benefit from the current cost-of-living crunch, since they have the size and leverage with suppliers to undercut rivals on price.
However, Wall Street hasn’t exactly stopped worrying about the state of the consumer. Retailers have also tweaked their shopping assistants in an effort to iron out service issues. Still, the UBS analysts on Monday found that Walmart, Costco and warehouse chains even beat out auto-parts retailers like AutoZone and O’Reilly Auto Parts when the chatbots were prompted with questions about car-battery replacements and other requests related to automobiles.
Elsewhere, they said that the chatbots seemed to agree that discount grocery chain Aldi was the best place to go for low grocery prices, and they also recognized Dick’s Sporting Goods as a big destination for athletic gear. The chatbots appeared to regard Target as “a secondary option associated with quality private-label offerings, merchandising and shopping experience.” The analysts said retailers and brands have spent years fighting for shelf space, advertising dominance, search results and app downloads. Now, they may need to also fight for AI recommendations.
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