The Rise of Intelligent Virtual Assistants:

Transforming Retail in 2025

By Stephanie Bannos-Ryback, Executive Vice President, Ipsos

Virtual Assistants are not simply automated chatbots; they are intelligent systems designed to emulate human interaction. Powered by natural language processing (NLP), machine learning, and deep neural networks, VAs can understand complex queries, offer personalized recommendations, and even anticipate customer needs.

Customers can receive instant support, tailored product suggestions, and proactive assistance, all leading to increased satisfaction and loyalty. As AI technology continues to advance, VAs will become even more adept at understanding nuances in language and emotion, promising more seamless transitions between human and machine interactions.

In the fast-paced world of retail, consumers prioritize efficiency and functionality. They expect quick issue resolution and access to information. VAs excel in this area, providing 24/7 support, automating tasks, and streamlining workflows. This not only improves customer satisfaction but also frees up human agents to focus on more complex issues, optimizing resource allocation and improving overall productivity.

While VAs are increasingly capable of carrying out the functional components of experience delivery (checking stock availability, tracking orders, processing returns, resolving service issues, etc.), human touch remains essential. Consumers still value human interaction, particularly for complex or emotionally sensitive issues. The key is to strike a balance between AI-powered efficiency and human empathy. VAs should be designed to seamlessly escalate complex issues to human agents, ensuring that customers receive the appropriate level of support. This hybrid approach combines the speed and efficiency of AI with the personalized touch of human interaction, creating a truly optimized customer experience.

While functionality is paramount, the "personality" of a VA plays a crucial role. Retailers should carefully consider the tone, style, and branding of their VAs, ensuring they reflect the brand's identity and resonate with their target audience. This personalized approach can foster a stronger connection with customers and enhance brand loyalty, but it’s difficult to achieve. Given the “generative” nature of AI, a significant degree of model training and testing is required to create a VA that delivers a consistent personality that aligns with the broader brand identity.

The rise of VAs also brings important considerations regarding data privacy, customer control, and bias mitigation. As consumers share more information with AI-powered tools, retailers must prioritize transparency and data security. Clear communication about data practices and AI usage is crucial for building trust. Furthermore, consumers want control over their interactions with brands. They expect seamless access to VAs, accurate information, and the ability to choose between AI-powered and human assistance. Finally, retailers must address potential biases in their AI algorithms and ensure their VAs provide equitable experiences for all customers.

The future of retail is inextricably linked to the continued evolution of VAs. We predict a surge in VA adoption in 2025, driven by increasing consumer comfort, the demand for personalized experiences and the promise of increased operational efficiency. Retailers will focus on creating emotional connections through their VAs, developing distinct personalities and incorporating elements of empathy and humor. Hyper-personalization will become the norm, with VAs tailoring product recommendations and promotions to individual customer preferences. Proactive customer service will also become more prevalent, with IVAs anticipating customer needs and offering assistance before issues arise.

By embracing this technology and proactively addressing key concerns, retailers can enhance customer experiences, improve operational efficiency, and gain a competitive edge in the evolving market. 2025 promises to be a pivotal year for VAs in retail, and those who adapt and innovate will be best positioned for success.

At Ipsos, we leverage our extensive experience in CX and analytics to help our clients identify areas for improvement, optimize chatbot and virtual assistant design, and ensure alignment with business objectives. With our data-driven approach, we help clients develop AI-powered solutions that enhance customer satisfaction, build trust, and drive business growth. If assessing and optimizing your AI-powered solutions is top of mind for you in 2025, contact us.

*This poll was conducted by Ipsos from May 7-8, 2024, using a sample of 1,005 adults age 18 or older. The sample for this study was randomly drawn from Ipsos’ online panel, partner online panel sources, and “river” sampling and does not rely on a population frame in the traditional sense. For more information on the methodology and the topline results, click here.