People, not technology emerge as biggest barrier to AI adoption in retail and hospitality

Retail and hospitality businesses are investing heavily in artificial intelligence, but a shortage of skills, understanding and trust among employees is threatening to limit the returns from those investments, according to new research.

Nearly nine in 10 (88 per cent) retail and hospitality organisations are already using AI in workforce management, including forecasting, scheduling and analytics, while 81 per cent plan to increase their investment in the technology over the next year, according to a survey of more than 200 industry leaders published by retail technology platform Rotageek.

The findings point to a widening gap between enthusiasm for AI and the organisational capabilities needed to deploy it effectively. While businesses are increasingly adopting the technology, many have yet to invest sufficiently in the people and processes required to make it work.

Confidence in AI’s potential remains high. Almost half (48 per cent) of respondents said AI had “very high” potential to improve workforce performance. The same proportion believed the technology could save managers between five and nine hours a week, while 33 per cent expected it to deliver a 6-10 per cent improvement in labour cost efficiency or productivity.

But people, rather than technology itself, were identified as the principal obstacle to wider adoption.

Two-thirds (67 per cent) of respondents said “the biggest challenge with AI is people, not technology”, while 70 per cent said “AI adoption is viewed positively, understanding is limited”.

The lack of internal expertise was cited by 35 per cent of respondents as a principal barrier to effective use of AI in workforce management. The same proportion raised concerns about trust, transparency and explainability.

Other obstacles included data quality and integration, cited by 33 per cent, and regulatory concerns, identified by 32 per cent.

The results suggest that companies may be at risk of focusing on acquiring AI systems without making equivalent investments in the workforce needed to use them. For retailers and hospitality groups, where labour costs and workforce scheduling are central to profitability, the ability to translate AI-generated insights into operational decisions could prove as important as the underlying technology.

Chris McCullough, co-founder and chief revenue officer at Rotageek, said the sector was approaching a critical point in its adoption of AI.

“The retail and hospitality sectors are at a pivotal crossroads when it comes to AI adoption. Its power to transform workforce management is no longer in dispute. But what separates businesses who see real returns from those experiencing marginal gains is their willingness to invest in education, training and the cultural shift required for seamless integration.

“That starts with people. Our research shows that the biggest barrier to AI isn’t technology, it’s people’s understanding and expertise. From here, leaders must demystify AI by grounding it in real-world outputs that matter to employees – for example, how smarter demand forecasting can directly shape their shift patterns.

“Leaders must also push beyond people’s technical know-how and build genuine AI fluency – the ability to know when to rely on AI and when human judgement should override it. This blend of technological insight and human decision-making is what moves organisations from surface-level adoption to genuine integration. It’s also what gives leaders the confidence to redesign roles and trust employees to focus on activities that deliver the greatest value, such as customer engagement and strategic decision-making.”