Gen Z fuels retail market, 74% of Malaysians utilize AI

Consumer spending by Generation Z (Gen Z) is significantly boosting Malaysia's retail sector, with artificial intelligence (AI) now being used by 74% of the population for shopping purposes. A new report reveals that 77% of retailers experienced an increase in annual revenue compared to last year, and 17% of Gen Z consumers admitted to spending considerably more than in the previous year.

The latest Adyen 2026 Malaysia Retail Report also found that 37% of consumers use AI assistants at least once a week for product discovery and inspiration. However, a notable trust gap remains a significant barrier, with 52% of Malaysians expressing discomfort with AI autonomously managing their purchase transactions due to security and transparency concerns.

“

Retailers who successfully apply AI to drive sales and operational efficiency are those who ensure their core business systems are connected first. Data hygiene, including customer information, sales data, and product stock-keeping units (SKUs), must be prioritized before integrating AI.

Lee Soon Yean, Country Manager for Adyen Malaysia, explained that the transition from AI assistants to agent-based commerce requires retailers to build trust throughout the customer experience, especially during payment processes. He emphasized that successful AI implementation in retail hinges not on the number of AI tools subscribed to, but on the ability to understand customer needs and solve real problems.

“

The moment airports are commercialised and properly concessioned, operators begin to introduce world-class standards and improve service delivery.

"Retailers who successfully apply AI to drive sales and operational efficiency are those who ensure their core business systems are connected first," Lee stated. "Data hygiene, including customer information, sales data, and product stock-keeping units (SKUs), must be prioritized before integrating AI." He added that this phased integration can simplify processes, reduce manual tasks from days to minutes, and enhance market competitiveness.

Regarding the risk of small businesses or micro, small, and medium enterprises (MSMEs) being left behind by the technology wave, Lee believes they will not be sidelined but will rely on partners or digital platform providers. He drew parallels to the adoption of e-invoicing and digital point-of-sale (POS) systems, where businesses subscribed to existing market tools, similar to using AI assistants on platforms like WhatsApp. Datuk Liew Bin, President of the Malaysia Retailers Association (MRCA), added that price competition alone is no longer sustainable in the saturated local market, urging retailers to leverage technology and focus on building long-term loyalty through consistent, excellent, and trustworthy shopping experiences.

“

Price competition alone is no longer sustainable in the saturated local market. Retailers need to leverage technology to meet this shift in demand, as well as focus on building long-term loyalty by offering consistent, excellent, and trustworthy shopping experiences.