Today’s retail industry is actively integrating various aspects of AI for improvements not only in customer service but also in inventory management, the analysis of consumer behaviour, and marketing automation. The adoption of AI opens expansive vistas for innovation, but simultaneously involves many legal problems that need due consideration and elaboration on particular legal regulations. AI analyses customer preferences and behaviour, which permits offering more personalized products and services to increase satisfaction and, therefore, improve sales. AI will help companies predict demand and optimize their inventories accordingly, thus reducing storage costs and minimizing the possibility of product shortages. AI-powered chatbots and virtual assistants provide 24/7 customer support, reducing wait times and further enhancing the effectiveness of the service. AI would analyse market data and assist in determining the optimal price of merchandise, considering demand, competition, and other major determinants. A very relevant example of AI applications in retail is that a significant amount of customer data has to be gathered and processed, further underlining how vital compliance with current privacy legislation, such as it is represented by GDPR in Europe, is. AI management must be ethical, discrimination must be barred, and customers must be treated non-arbitrary. That means companies must make AI transparent for their clients so that a client knows how their data is being used and what decisions can be made based on that. Artificial Intelligence opens the opportunity for significant improvement in the issues of efficiency and quality of service. In any case, if AI is to coexist harmoniously with retail businesses, wide-ranging legislation will need to be written and implemented, one that controls the use of data protects consumers, and defines liability for actions taken via the technology.