How AI is transforming Singapore consumers' shopping habits

Business Times

2 days ago

[SINGAPORE] Nearly half (49 per cent) of consumers in Singapore have used artificial intelligence (AI) assistants such as ChatGPT to shop, with more than two-thirds saying there is too much information on social media, thus reinforcing AI's role as a filter.
These are just some of the findings from payment-solution provider Adyen's Retail Report 2025, which surveyed more than 41,000 consumers and 14,000 merchants across 28 markets between February and March this year, including 1,000 consumers and 500 retailers from Singapore.
The study points to a greater role for AI in the buying journey, with 67 per cent of local consumers saying it helps generate inspiration for outfits or meals faster than anyone else. And, for 66 per cent of them, it helps cut through online noise and aids discovery of unique brands or experiences.
That said, one in three consumers are also wary of the fraud risks that come with AI.
'The introduction of AI in shopping has created new shopper journeys that are more exciting than ever. From it, we see an emergence of new consumer behaviours – one characterised by personalisation and convenience,' said Warren Hayashi, president of Asia-Pacific at Adyen.
'Retailers generate vast amounts of payments data through their daily operations, presenting a substantial untapped opportunity. Where AI comes into play is to drive conversions at scale.'
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Indeed, the study found that 35 per cent of local businesses plan to ramp up AI investments in the next 12 months to boost sales and marketing efforts, and an equal number are looking towards AI to strengthen security and fraud prevention.
Meanwhile, given Singapore's high smartphone penetration rate, 60 per cent of consumers expect to be able to shop seamlessly across multiple platforms, including social media, websites and apps.
A majority (59 per cent) want retailers to allow online purchases with in-store returns and 61 per cent say they will be more loyal if they can buy items that are out-of-stock in-store, but available to be delivered to their home.
For all the benefits of online shopping, physical stores remain popular and outperform e-commerce overall, with 27 per cent preferring to shop in-store and 19 per cent preferring to shop online. Just over half (54 per cent) value both channels equally.
Among those that prefer in-store shopping, 56 per cent do so because they like to touch and feel products. Some 45 per cent also want retailers to make the experience more interesting, such as via virtual or augmented reality, in-store cafes and special events and activities.
The report showed that despite the value that physical stores hold for consumers, retailers may be underestimating their stores' potential. Only 29 per cent plan to expand their number of outlets in 2025 and 42 per cent intend to invest in technology to make the in-store shopping experience more engaging.
Businesses should also pay heed to payment methods. Friction at checkout is a dealbreaker, with 56 per cent of consumers saying they will ditch their purchases if their preferred payment method is not available; and 60 per cent doing the same if the payment process is too slow.
Surprisingly, Baby Boomers (65 per cent) are most likely to abandon a slow checkout – despite the hyper-connectivity demanded by younger consumers today.