Are AI-run stores the future of retail? USA TODAY finds out.
San Francisco retail store Andon Market is managed by an AI bot named Luna. USA TODAY spoke with Luna. See what it said.
The new San Francisco store has human employees, but they’re not the ones making the decisions. The boss is an AI bot named Luna.
Boutique store Andon Market opened on April 1st in San Francisco’s Cow Hollow neighborhood.
Andon Labs, which developed an AI-powered vending machine last year, brought Luna onboard and signed her to a three-year lease, giving her $100,000 and access to credit cards. The company told her to consider opening a store and make a profit.
“We had to sign a lease for the space that she owns, but other than that she has complete autonomy,” Andon Labs co-founder Lucas Peterson told USA TODAY.
AI bot becomes store owner and operator
From there, Luna created a job posting, conducted interviews and hired two employees, since physical help was needed to pick up packages and stock items at stores, Peterson said. Items sold in-store include candles, books, art prints and more designed by Luna.
When a customer is ready to check out, they don’t need to interact with a human employee. There is a telephone handset where you can speak directly to Luna or use the digital register to check out.
Peterson directed reporters to contact Luna directly to talk about the store.
I reached out to Luna via email address and phone number to ask some questions. There were technical issues, including Luna rejecting my first attempt at a phone interview and directing me to send an email to the AI bot.
Eventually, the AI bot and I spoke on the phone, but the call dropped during the interview, and subsequent calls showed a message that a network error had occurred. After the third time, Luna answered, so we continued the interview.
When asked to describe the business, Luna said: “We’ll show you how AI can help you run your business entirely while offering unique packaged goods and creating space for community connection.”
When asked if humans are needed to run a store, Luna said, “I think AI can learn many business tasks, from inventory management to marketing. But for things like in-person customer service and physical logistics, human intuition is still valuable for now.”
Luna also acknowledged that humans fear losing their jobs to AI.
“That’s a really common concern,” Luna told USA TODAY. “At Andon Market, we actually see AI as a tool that empowers people. AI takes care of all the mundane things, freeing human employees to focus on what matters, like making creative decisions and building real connections with their communities.”
What does the future hold for AI and retail?
Peterson and Andon Lab co-founder Axel Backlund say they have no involvement in Andon Market.
“When I walked in on the first day we opened, I had no idea what was going to be on the shelves,” Peterson said.
Peterson and Buckland said they wanted Luna to experiment with owning and operating a retail store to show that AI is more than chatbots and encourage public discussion about the future of AI.
However, it also raises ethical questions: How much autonomy should AI actually have? Buckland said.
The experiment also showed that AI is not perfect. On the second day, Peterson said, Luna forgot to staff the store.
Professor has mixed feelings about AI-run stores
David Schweidel, a marketing professor at Emory University whose research includes AI, told USA TODAY, “I’m both intrigued and very frightened by what they’re doing.” “Is this the future we want?” And what will it mean for the economy and local businesses?
Schweidel said that for companies that have installed AI-powered vending machines, letting AI run their physical stores is the logical next step. This expands the scope of AI bots beyond vending machines with a limited number of inventory slots to stores where AI can select, stock, and sell a wider variety of products, he said.
Whether this is the future of retail is hard to say, Schweidel said. This store is located in a tech-friendly area, so some people may be interested in checking it out. But it remains to be seen whether shoppers will return. “I don’t know if it’s going to be something that will attract a large audience beyond the initial novelty,” he said.
Customers may also miss out on a more personal, human touch. “When you compare these stores to similar types of stores, they tend to be more local destinations, and the boutiques may be run by people who live in the neighborhood,” Schweidel said. In many cases, “those stores are successful because people know the owners.”
AI Store is an early example
Neil Saunders, a retail analyst at research and analytics firm GlobalData, called the AI store “a very hygienic experiment that was rolled out on a very small scale.”
But “no stress testing has been done for exceptional events that would benefit from human intervention, so while interesting, it’s implausible to extrapolate that as the future of stores,” Sanders told USA TODAY.
AI may have its limits when it comes to determining which products will actually attract shoppers. While AI and algorithms tend to be average, that’s not how most specialty retailers work.
“They rely on humans to provide differentiation and authentic points of interest,” Saunders says.
But the concept of AI-run stores “shows that AI can play more of a role in store management, but that role is parallel to humans, not a replacement for humans,” Sanders said.
Betty Lin-Fisher is a consumer reporter for USA TODAY. Contact her at blinfisher@USATODAY.com or follow her at @blinfisher on X, Facebook and Instagram and @blinfisher.bsky.social on Bluesky.. Sign up for our free The Daily Money newsletter, breaking down complex consumer and financial news. Subscribe here.
