Tech Investor: AI Creating “Two Distinct Retail Economies”
Small and medium-sized retailers are at risk of being left behind as the UK faces its most severe AI talent shortage on record, according to new research that warns of a £2.3 billion digital divide emerging in the retail sector.
81% of UK tech leaders cited AI skills shortage as their primary challenge in 2024, with SME retailers particularly vulnerable as they compete against larger businesses for scarce AI expertise.
Research suggests the UK retail AI market will surge from £311 million in 2024 to £2.3 billion by 2027, but this growth risks being concentrated among businesses with the resources to attract specialist talent.
SME Challenge Intensifies
“We’re witnessing the creation of two distinct retail economies,” says Draven McConville, a tech investor and founder at Klipboard. “Companies that secure AI talent will operate with fundamentally different cost structures and capabilities than those that don’t. This is basically about survival.”
The research shows UK-based hiring managers are paying 45% more on average for professionals with AI expertise, potentially pricing out smaller retailers who can’t compete with enterprise-level salary packages.
For small retailers, the skills gap has immediate operational consequences. Insufficient skills and expertise are the primary barrier to AI implementation, leaving SMEs at a disadvantage as competitors deploy AI for inventory management and customer insights.
The challenge is particularly acute in retail-specific applications. While inventory and demand forecasting accounts for 28.3% of retail AI market share, many smaller retailers lack access to the specialized talent needed to implement these competitive systems.
SME’s Response
For SME retailers, the AI talent shortage represents a critical strategic challenge that requires creative solutions. Options include partnerships with local universities, shared AI resources through industry consortiums, or investment in training programs for existing employees.
According to McConville, success in the AI-driven retail landscape won’t be determined by algorithms alone. “It’ll be determined by the people who understand how to apply those algorithms to real retail problems. The companies that recognize this and act accordingly will define the next decade of retail competition.”
