Consumers remain contradictory. Retail earnings for the year’s final quarter show a consumer who is still spending but doing so in tighter, more income-constrained ways. They say they are anxious about inflation even as inflation has cooled compared to its peak. They report sensitivity to higher prices but still open their wallets for convenience, faster delivery and premium goods.
Retailers, caught inside this paradox, are responding with a host of artificial intelligence innovations and price-sensitive strategies. Walmart, for example, is reportedly considering an AI-driven shift to the way people shop by piloting advertisements inside its AI-powered shopping assistant, Sparky, a tool that until now has served purely as a convenience feature for customers.
The new ad format, dubbed “Sponsored Prompt,” injects branded content directly into the AI-driven shopping dialog. The move marks Walmart’s transition from viewing AI as a service enhancement to potentially treating it as a new frontier for retail media revenue and discovery-funnel optimization.
Walmart’s largest rival, Amazon, already launched its own AI-powered shopping assistant, Rufus, last year. On Nov. 18, Amazon introduced sponsored prompts of its own for Rufus.
“More than 250 million customers have used Rufus this year, with monthly average users up 149% and interactions up 210% over the past year,” Amazon said at the time of the announcement. “Customers who use it while shopping are over 60% more likely to make a purchase during that shopping trip.”
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Read also: Amazon and Walmart Race to Win Over a Cautious Consumer
From Browsing to AI-Led Commerce
The National Retail Federation expects shoppers to collectively spend more than $1 trillion during November and December, a year-over-year increase between 3.7% and 4.2%. Under normal circumstances, this would read as a comfortably optimistic forecast. But in 2025, normal circumstances feel like a relic.
Data from the October “New Reality Check: The Paycheck-to-Paycheck Report” by PYMNTS Intelligence found that 26% of consumers had difficulties paying their bills in September, the highest share in at least two years.
Walmart’s own third-quarter 2026 earnings results, released Nov. 20, showed that value remains the dominant force shaping consumer behavior, with shoppers increasingly using digital channels to find it.
While the retail landscape hems and haws over the question of whether shoppers will spend enough to rescue a sector that has been wobbling through a year of uneven consumer confidence, persistent supply chain friction and a macroeconomic backdrop that never quite stabilized, category leaders like Walmart and Amazon are increasingly operating under the assumption that the only certainty is the one you build yourself.
Both retailers are leaning on AI to build the future of retail, particularly as consumers continue to flock to where they see value. The technical mechanics of AI-assisted shopping reflect a deeper transformation in how commerce may work soon. In traditional eCommerce, shoppers scroll through product grids, apply filters, read reviews, add products to cart and buy.
With agentic AI, like Sparky and Rufus, the experience becomes conversational and contextual. Users ask natural language questions, and the AI interprets intent, offers personalized advice and executes purchases.
See also: AI Agents Are Moving to the Front of the Checkout Line
Competitive Pressure and the Race for AI-Driven Spend
Data from the “Prompt Economy™: When Bots Are the Customer,” a collaboration between PYMNTS Intelligence and Visa, revealed how the rise of agentic AI is redefining the fundamentals of digital commerce. As bots like Sparky and Rufus become digital concierges, merchants must make their data and policies readable by machines, not just people.
The architecture of retail media, product discovery and customer journey design is being reconfigured by the rise of AI agents. The familiar model of search bars, SEO, category pages, reviews and banners could give way to conversational flows, prompt-based interactions and real-time recommendations.
Brands, agencies and marketers may need to rethink how they target customers. Instead of optimizing for search keywords or display-ad conversions, they’ll need to design for intent-based dialogues, building brand presence not at the moment of visibility, but at the moment of relevance. Advertising budgets may migrate from traditional pay-per-click models toward investing in prompt placements, conversational hooks or sequence-based recommendations through AI agents.
For retailers, that may mean tight integration between product algorithms, inventory data, ad logic and fulfillment systems.
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