What: Companies are increasingly using digital controls in smart products to extract additional value, often degrading customer experience and ownership.

Why it is important: This trend highlights growing regulatory and reputational risks for retailers as digital strategies increasingly conflict with customer trust and privacy expectations.

The article explores how the integration of digital features into physical products is fundamentally altering the relationship between retailers, manufacturers, and consumers. Initially, smart capabilities such as connectivity, sensors, and data analytics are welcomed for the added convenience and functionality they provide. However, as companies gain unprecedented control over these products post-sale, they often shift toward monetizing user data, introducing subscription fees for core features, and restricting repair options. This evolution erodes the traditional sense of ownership, locking customers into ongoing payments and limiting their autonomy. The backlash is evident in rising consumer dissatisfaction, legal challenges, and a surge in demand for older, non-digital models that offer greater independence. The pursuit of short-term profits through these digital strategies risks undermining long-term brand trust, as customers become wary of surveillance, data exploitation, and diminished product value. As the retail sector continues to embrace digital transformation, the challenge will be to balance innovation with ethical responsibility and customer-centricity.

IADS Notes: The growing integration of digital capabilities into retail products and services has brought both innovation and new risks. Throughout 2025 and into early 2026, retailers have increasingly adopted AI-driven pricing, data monetization, and algorithmic personalization to enhance profitability and operational efficiency. However, these advances have also triggered significant backlash, with consumers and regulators expressing concern over covert “surveillance pricing,” lack of consent in data use, and the erosion of customer trust. Notably, New York’s AI pricing law and similar global regulations have set new standards for transparency and accountability, while legal challenges from industry groups highlight the sector’s struggle to balance innovation with ethical responsibility. Reports from Forbes and BCG underscore that only a minority of retailers have achieved robust digital security, leaving many exposed to reputational and operational risks. As digital transformation accelerates, the retail industry faces mounting pressure to prioritize responsible governance, privacy, and customer-centric strategies to sustain long-term trust and competitiveness.

Enshittification comes to ‘Smart’ products