The internet gave independent retailers a fighting chance. Is AI taking it away?
For decades, the internet has promised to level the playing field for retailers. Independent businesses that once depended on customers walking through their doors gained the opportunity to reach shoppers anywhere, competing with national chains in ways that would have been unimaginable before.
Now, the growing popularity of AI search with consumers threatens to reverse that progress.
Who gets to compete?
Early signs suggest that when it comes to AI search the playing field is far from even for retailers. New research from Vaer AI, in partnership with Lightspeed Commerce, analyzing 460,000 AI-generated shopping responses across ChatGPT and Google’s AI products, found that bigger merchants have an edge from the very start. When ChatGPT included retailer names in its own web searches, 97% were large or mid-sized chains. Small and local retailers accounted for just 1-4%.
What struck me most was that independent merchants weren’t necessarily missing because AI couldn’t find them. Large and small retailers each accounted for roughly 38% of the sources AI cited. But big chains received 52% of the top recommendations, versus just 20% for smaller businesses.
Consider a shopper looking to buy office supplies in New York. Three of the six sources ChatGPT cited were small local retailers, but its first recommendation was Staples. The local options were there. They just didn’t make it to the top.
AI didn’t overlook these businesses because it couldn’t find them. It found them and recommended Staples anyway.
Think about what that means for independent retailers. They’ve spent decades investing in their online presence, learning how to compete in search results and finding ways to reach customers without the marketing budgets of national chains. Now, they can do everything right and still lose out when AI decides which businesses to recommend.
The closer a shopper gets to making a purchase, the wider the gap becomes. Smaller retailers’ share of top recommendations fell from around 30% for general browsing to just 10% for specific branded products, while larger retailers’ share rose from roughly 40% to 60%.
The concern isn’t simply that AI might steer shoppers toward bigger retailers. It’s that AI could increasingly determine which businesses get the chance to compete at all.
What consumers want
The irony is that this isn’t necessarily what consumers want. Recent research from my company found that half of surveyed consumers would be more likely to shop locally if AI made nearby independent retailers easier to discover. When asked what AI should prioritize when making recommendations, 33% of consumers said small or local businesses, compared with just 13% who thought AI should prioritize large brands.
This shows a clear disconnect between what consumers want and what AI is giving them. A shopper may truly want to support the independent bookstore or boutique down the street, but they can’t choose a business they never knew existed.
As AI moves closer to shopping on our behalf, this gap becomes harder to ignore. The more choices we hand over to AI, the more important it is to understand whose choices it’s actually making and where it’s out of alignment.
What can we do before AI makes the choice for us?
It may seem like the odds are already stacked against independent retailers, but invisibility isn’t inevitable. Vaer AI’s data shows that simply having consumers add the word “independent” to a shopping prompt more than doubled the share of small and local retailers AI recommended. It also changed where AI looked for information: the share of retailer sources coming from large national chains fell from around 44% to as low as 9%.
One word. That’s all it took to dramatically change which businesses AI recommended.
For consumers, the lesson is simple: be specific about what you value when using AI. If you want to support independent businesses, say so in your prompt. The results suggest that the way we ask these tools to search can meaningfully influence the choices they put in front of us.
But why should consumers have to know the right words to give independent retailers a fighting chance?
We should also think about what the algorithm is prioritizing. If size, familiarity, or a larger digital footprint consistently push national chains to the top, we risk building a shopping experience where the biggest businesses become the default, regardless of what consumers want.
AI has the potential to broaden discovery and expand our options, not narrow them. The goal should be to give consumers better choices and help them decide more easily, not quietly make those decisions on their behalf.
The future of retail should include more choice, not less
As AI takes on a greater role in how we discover and buy, we need to make sure it opens doors for businesses rather than closing them. AI should help consumers find the most relevant options, not just reinforce the biggest, most visible retailers.
That matters for consumers as much as it does for businesses. A healthy retail ecosystem depends on shoppers having real choice, and on businesses of every size having a real opportunity to earn their attention and dollars.
As this technology evolves, we have an opportunity to be thoughtful about the kind of shopping ecosystem we want it to create. The future of retail should be one where AI makes it easier for great businesses to compete, not one where fewer businesses get the chance.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
