Dunnhumby’s Erich Kahner on why retail’s next chapter won’t be written by AI alone

“There are sort of two broad areas people are focused on,” he said. “The tech trends, particularly around AI – and then the retail basics.”

That tension between innovation and fundamentals runs through Dunnhumby’s newly launched Retailer Preference Index (RPI), which analyzes customer perception and financial performance across 81 major US grocery, discount, club and online retailers. And it tells a story that may be uncomfortable for anyone hoping technology alone will provide the answers.

Agentic AI is real – but it’s not the whole story

On the technology side, Kahner said the most common question he’d been asked at NRF was a simple one: “Do you have an agent for that?”

Retailers, he noted, are starting to see practical applications emerge. “We’re seeing some big names come out with agentic shopping trials,” he said. “That has given retailers something tangible to focus on.”

But while he believes agentic commerce could eventually reshape how customers discover products – in the same way search did in the early 2000s – he’s cautious about overstating its immediate impact.

“From the sense of changing the fortunes of retailers, I don’t think it’s that big,” he said. “What’s still going to matter the most for driving who grows market share is bringing the right products to the right people at the right prices.”

In other words: AI will matter, but it will quickly become table stakes. Just as digital search did before it.

Physical retail is back – and it matters more than ever

That realism extends to the role of physical stores. A decade ago, many legacy retailers looked vulnerable. Today, Kahner sees the opposite.

“Retailers with an installed store base, who can blend digital with that physical experience, have an edge,” he said. “Digital shouldn’t be the tail wagging the dog.”

While conversational search may expand the audience for digital-first grocery shopping, he believes it will remain a minority behavior. The real opportunity lies in integrating AI into the journey towards the store, not replacing it.

Retailers like Walmart, Kroger and strong regional players, he argues, are better placed than pure-play e-commerce businesses because they can connect agentic tools with real-world fulfillment.

Why savings now outranks digital

The strongest signal from Dunnhumby’s RPI is not technological at all. It’s economic.

“Our modeling shows that price, promotion and rewards account for 41% of the variation in long-term financial and customer outcomes,” Kahner said. “That’s the single most important pillar.

Savings-first retailers – Walmart, Aldi and others – are widening their advantage, not just on price, but increasingly on perceived quality, too. That convergence, he warned, is creating a far tougher competitive environment for retailers who sit in the middle.

The reason is structural. “In the US, 56% of people say they couldn’t afford a $400 emergency expense,” he said. “Between 40% and 50% of households don’t earn enough to cover basic needs.”

That pressure doesn’t disappear just because inflation eases. “Even when year-over-year numbers improve, the underlying affordability issue doesn’t go away,” he said. “It’s not just vibes.”

The real risk of AI: trust and bad data

If AI presents opportunity, it also introduces a new category of risk – particularly when it comes to trust.

Kahner has been struck by how fragile early agentic systems still are. “They’re powerful, but they’re also fallible,” he said. “They can get simple tasks wrong.”

That’s not a failure of the technology so much as a reminder that human oversight remains essential. “They’re very far from autonomous,” he said. “They need people with domain knowledge managing them.”

Without clean, connected customer data behind the scenes, the danger is that AI introduces new ways to disappoint customers. “If the data isn’t sound, that’s where trust breaks down,” he said.

Experiment – but don’t lose the plot

So what should retailers actually take back from NRF 2026? “Don’t get discouraged,” Kahner said. “The perfect answers aren’t out there yet – and they never will be.”

Experimentation is necessary. Failure is normal. But it shouldn’t come at the expense of the basics. “Don’t over-invest in innovation to the point where you’re taking money away from good prices, good promotions and the right products.”

For Kahner, the biggest opportunity in 2026 is clear: helping customers save money in smarter, more personalised ways. The biggest threat is losing focus while trying to chase it.

“Affordability is rising in importance,” he said. “But the danger is eroding what you already own while trying to close the gap.”

In a hall full of demos and promises, it was a quietly bracing reminder: retail’s future may be smarter – but it won’t be rewritten from scratch.

Commerce media is moving fast. The Drum Awards for Commerce Media are here to recognize the work keeping pace – and setting the standard. Join us in Miami in April as part of The Drum’s year-round Commerce Media program. Learn more and enter.