What: Retail’s rapid AI adoption is exposing psychological, strategic, and operational vulnerabilities that echo the dot-com era.

Why it is important: These patterns reveal that emotional and strategic missteps, not technology itself, pose the greatest threat to retail stability, echoing recent findings.

The accelerating adoption of AI in retail is creating a complex landscape where excitement and urgency are often tangled with insecurity and exhaustion among leaders and teams. While AI offers transformative potential, the emotional and cognitive readiness of organisations lags behind, increasing the risk of performative decision-making and eroding strategic clarity. The article draws strong parallels to the dot-com bubble, emphasising that past collapses were driven not by technological failure but by human overconfidence and a willingness to prioritise hype over fundamentals. Today, the stakes are higher, as AI is deeply embedded in the core infrastructure of retail, making any disruption potentially far-reaching. The sector is further challenged by a workforce already experiencing burnout and digital overwhelm, which amplifies vulnerability. Ultimately, the text argues that the real risk lies not in the technology itself, but in the human behaviors and emotional patterns that shape its adoption. Leaders are urged to focus on emotional awareness, strategic discipline, and the well-being of their teams to ensure resilience as the AI wave continues to reshape the industry.

IADS Notes: In September 2025, a BCG report highlighted that only 36% of retail workers felt prepared for AI-driven change, emphasising the urgent need for upskilling and balanced integration of technology and human capability. Also in September 2025, Inside Retail warned against performative AI adoption and the erosion of human judgment, drawing explicit parallels to the hype-driven missteps of the dot-com era. In August 2025, The Robin Report detailed the operational vulnerabilities introduced by overreliance on AI and third-party systems within retail infrastructure. Additionally, a July 2025 Times of India article underscored the sector’s heightened instability due to workforce burnout and digital overwhelm, particularly among younger employees.

When the AI wave crashes: What history, behaviour and markets tell us