Why it matters:
- Nearly 60% of small businesses now use AI, more than double the share in 2023, according to a U.S. Chamber of Commerce report.
- Small businesses who are high-tech adopters outpace low-tech competitors in terms of growth, with 84% of high-tech adopters reporting gains in sales and profits, according to the report.
- At the same time, major retailers including Walmart, Target, Home Depot, and Lowe’s are driving rapid AI advances by adopting more powerful AI tools.
Last year, U.S. businesses realized the extent to which AI was poised to transform nearly every aspect of commerce, from the way customers discover products and companies to how businesses conduct their operations.
Now, the country’s largest merchants and tech companies are rushing to employ more sophisticated AI tools, meaning small businesses must figure out how to keep up with the changes, or be left behind.
AI, in 2026, is evolving “from a passive tool that offers prediction, to active, autonomous resources [that] can execute complex, multi-step, prescriptive actions across every consumer and operational touchpoint,” Carrie Tharp, Vice President, Global Solutions and Industries at Google Cloud, said.
The world’s largest retailer, Walmart, is embracing the changes in a big way, increasing the odds that the rest of the commerce world will follow. “We aren’t just watching the shift, we are driving it,” said John Furner, Walmart’s President and CEO, during the National Retailer Federation’s Big Show last month attended by CO—.
Small businesses are joining in the AI transformation. Close to 60% of small businesses are using AI, up 18% year-over-year in 2025, and double the amount since 2023, according to a report by the U.S. Chamber of Commerce.
The report found that small businesses who are high-tech adopters see growth rates that outpace low-tech small businesses, with 84% of high-tech companies reporting gains in sales and profits.
Use of AI by the competition is prompting 80% of small businesses to accelerate their adoption of new technologies, according to the report.
And in a report by Coresight Research in partnership with Intel, AI was listed as a factor driving all of the top 10 trends in retail technology in 2026.
AEO is the new SEO: Brands must learn AI-friendly ways to communicate in order to be discovered
Brands and businesses that previously obsessed about search engine optimization (SEO) now must become experts in answer engine optimization (AEO), as consumers are turning away from standard searches and using more complex and conversational AI driven searches.
During the 2025 holiday season, global and U.S. e-commerce traffic from AI chatbots and browsers doubled compared to 2024, according to Salesforce. AI was credited with driving 20% of all retail sales during the season and generating $262 billion in revenue through personalized recommendations and better customer engagement.
With AI, search conversations are two to three times longer than previously, when a customer might simply have searched online for a blue shirt, Vidhya Srinivasan, Vice President and General Manager, Google Ads and Commerce, said. Now, she said, “A shopper might say, ‘Give me a blue top to wear to a bridal shower in San Francisco, and the dress code is formal.’”
Making product descriptions visible to AI is critical for small brands: ‘Near-term advantage will go to merchants whose catalogs are easiest for AI to interpret’
If a brand isn’t making detailed information about its products visible to AI search channels, it won’t show up in the AI recommendations that are driving sales.
John Harmon, Associate Director of Technology Research at Coresight Research and the author of the retail technology trends report, told CO— that one of most important thing small brands and merchants should do is to share their product description pages with AI chatbots and browsers, to make it more likely they will show up in searches.
“If you’re not sharing your product information with the chatbots, you’re at a big disadvantage,” Harmon said.
In the new age of AI, “near-term advantage will likely go to merchants whose catalogs are easiest for AI to interpret in natural language,” Jonathan Arena, Co-founder of technology company New Generation, told CO—. New Generation recently launched Kepler, a platform that helps retailers upgrade their websites to be fully AI-ready.
Having your business show up the moment a customer thinks about buying something and asks AI for a recommendation is crucial to driving sales.
“We used to talk about retailers wanting to be where your customer is. Now, it’s really more about being where intent begins for that customer,” Ricardo Belmar, Retail Analyst and Host of The Retail Razor Show, said during a webinar hosted by the IHL Group research and advisory firm.
[Read more: YouTube, Vimeo, and Whatnot Execs on How Video Is Critical to Brand Growth in the Age of AI]
AI agents are raising the e-commerce bar for small businesses: ‘Seamless experiences are now table stakes’
Making sure that your brands show up in AI searches has become even more important now that chatbots and browsers are evolving into more sophisticated AI agents that can handle every step of a customer’s journey, from discovery to purchase and checkout to post-purchase problem resolution.
Both OpenAI, the creator of AI platform ChatGPT, and Google, with its Gemini AI search browser, have recently released agentic AI upgrades that give their search platforms the ability to accept payments and provide instant checkout, and to make independent judgment calls on complicated decisions ranging from matching competitors by reducing prices to placing orders to restocking inventory.
Google also has created a shopping agent that can, for example, create a shopping list from a handwritten recipe and automatically purchase the items on the list.
These tools are designed to greatly reduce the time it takes from when a consumer first looks for a product to when the purchase has been completed.
Speeding up and simplifying the shopping process is critical for businesses in today’s hyper-competitive world, Google’s Tharp said. “When the journey gets complicated, shoppers don’t just get frustrated—they bounce,” she said. “Seamless experiences are now table stakes for a healthy business.”
[Read more: Retailers and Brands Large and Small Unlock (AI-Aided) Opportunities in a Challenging Pricing Environment]
Close to 60% of small businesses are using AI, up 18% year-over-year in 2025, and double the amount since 2023, according to a report by the U.S. Chamber of Commerce.
How small brands ‘can slingshot ahead’
Walmart, Target, Home Depot, Lowe’s, and other major retailers have signed up to partner with tech providers to offer these agentic AI solutions.
Arena of New Generation said small businesses also can leverage the new technologies that the giant retailers are rushing to take advantage of.
“The real divide won’t be big versus small so much as it will be around data maturity, implementation capacity—pilots, readiness, automating catalog readiness—and speed to market,” he told CO—.
“Large retailers may move earlier because they can absorb risk, run parallel experiments, and sometimes secure early access or launch partner [programs],” Arena said, “But small e-commerce brands can absolutely slingshot ahead if they run modern [tech] stacks, keep clean data, and work with the right implementation partners.”
A key issue for brands: Keeping control of the customer relationship
One issue that is causing businesses large and small to be wary about the new AI tools is concerns about losing control of the customer information and relationship if transactions take place within AI search.
“The core concern is the customer relationship,” Arena said. When discovery and decision-making take place within AI search, “brands risk becoming more interchangeable,” he said. “They may lose the behavioral and context signals they rely on for conversion and retention.”
“The winners,” Arena said, “won’t simply be the biggest brands. They’ll be the ones that can make their catalogs legible to [AI] agents without giving up control of the customer relationship.”
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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