What if the biggest competitive advantage in retail technology isn’t AI at all?
That was one of the most surprising takeaways from our latest Investor Perspectives on Retail & the Consumer conversation with Furhaan Khan, Managing Director and Head of Internet & Digital Commerce Investment Banking at UBS, who spends his days advising technology, commerce, and retail companies on acquisitions, capital raises, and strategic transactions.
While the retail industry has spent the last two years racing to add “AI” to every product pitch and investor presentation, Furhaan argues that the real question isn’t who has AI. It’s who has something AI can’t easily replace.
And that’s where things get interesting.
The Retail Tech Gold Rush
Walk the floor at any major retail conference and you’ll find hundreds of technology vendors promising to transform the customer experience.
Today, nearly all of them are talking about AI.
The challenge is figuring out which companies are truly differentiated and which are simply benefiting from the latest technology trend.
According to Furhaan, many of today’s retail technology providers will not exist a few years from now.
Some will be acquired. Some will struggle to find product-market fit. Others will discover that what looked like a standalone business was really just a feature waiting to be folded into a larger platform.
The reason is simple. AI is making it easier to replicate certain types of software, especially products focused on discovery, recommendations, and information gathering.
If AI can increasingly handle those functions, where does the real value go?
The Internet Is Really Only Two Things
One of the most memorable moments in the conversation comes when Furhaan simplifies the entire internet into two basic activities:
People buying things.
People trying to get those people’s attention.
For years, companies like Google and Amazon held enormous advantages because they possessed something incredibly valuable: intent data.
They knew what consumers were actively searching for and planning to buy.
Now, large language models are beginning to reshape that dynamic.
Instead of typing “best treadmill” into a search engine, consumers can ask an AI assistant:
“What’s the best treadmill for me?”
That shift changes everything.
Shopping becomes more conversational. Recommendations become more personalized. Discovery becomes increasingly centralized through AI-powered interfaces.
As a result, companies that built their businesses around helping consumers discover products may find themselves under pressure.
The companies that win may be the ones that control what happens after discovery.
The Five Characteristics of Durable Businesses
To evaluate which companies are most likely to thrive, Furhaan relies on a framework built around five key characteristics.
1. Proprietary Data
The first is data.
Not just any data, but unique information that competitors cannot easily access or recreate.
The strongest businesses own data that becomes more valuable as more customers use their products.
Retailers, loyalty platforms, and companies with direct purchase intelligence often have significant advantages here.
The question is not whether you have data but whether you have data nobody else can replicate.
2. Network Effects
The second characteristic is network effects.
These occur when a product becomes more valuable as more people participate.
Think marketplaces, major software ecosystems, and large consumer platforms.
The larger the network becomes, the more difficult it is for competitors to catch up.
AI can help create products faster.
It cannot instantly recreate years of customer adoption and participation.
3. Distribution
One of the newest additions to Furhaan’s framework is distribution.
Who controls access to the customer?
Distribution can take many forms:
- Physical stores
- Retail media networks
- Mobile devices
- Streaming platforms
- Software ecosystems
- Existing customer relationships
Companies that already own a meaningful customer touchpoint have a significant advantage when introducing new products and services.
As Furhaan explains, businesses that control distribution are not renting demand. They own it.
And ownership creates defensibility.
4. Transactional Intensity
Perhaps the most intriguing concept discussed in the episode is what Furhaan calls transactional intensity.
In simple terms, it measures how much of the actual transaction a company controls.
Businesses that sit at critical points of execution often have stronger long-term positions because they are deeply embedded in how commerce works.
Think:
- Payments
- Fulfillment
- Returns
- Logistics
- Commerce infrastructure
- Customer service
The closer you are to making commerce actually happen, the harder it becomes to replace you.
5. Brand
The final characteristic is trust.
Consumers often choose brands because they reduce uncertainty.
The same principle applies in technology.
Strong brands create confidence. They simplify decision-making. They signal quality.
In a world where switching costs continue to decline, trust becomes increasingly valuable.
Why Platforms Are Pulling Ahead
Another theme surfaced repeatedly throughout the conversation:
Platforms are becoming more valuable than point solutions.
Point solutions solve individual problems.
Platforms become embedded across workflows.
As AI lowers barriers to entry and accelerates software development, companies focused on a single narrow function may find themselves vulnerable.
Meanwhile, platforms that touch multiple stages of the customer journey become increasingly difficult to replace.
The more integrated a company becomes, the more durable its position.
What Retail Leaders Should Be Thinking About
For retail executives evaluating technology investments, Furhaan’s advice is surprisingly straightforward.
Look for companies that:
- Own valuable data
- Control customer access
- Influence critical transaction moments
- Benefit from network effects
- Build trusted brands
And perhaps most importantly, think carefully about where your own data resides.
As AI adoption accelerates, protecting proprietary customer insights may become one of the most important strategic decisions a retailer makes.
Because in an AI-powered future, data is not just an asset.
It may be the competitive moat that determines who wins.
Listen to the Full Episode
This article only scratches the surface of Chris Walton’s conversation with Furhaan Khan.
In the full episode, Furhaan dives deeper into how AI is reshaping commerce, why many retail technology companies may disappear in the coming years, the growing importance of distribution, and the framework investors use to identify durable businesses in an increasingly crowded market.
If you’re a retail executive, technology founder, investor, or anyone trying to understand where commerce is headed next, this conversation is worth a listen.
To hear the full conversation with Furhaan Khan, listen to or watch this episode of the Omni Talk Retail Investor Perspectives on Retail & the Consumer wherever you get your podcasts.
Apple Podcasts | Spotify | SoundCloud | Amazon Music | YouTube
Be careful out there,
– Chris and the Omni Talk team
Music by HookSounds
Omni Talk® is the retail blog for retailers, written by retailers. Chris Walton founded Omni Talk® in 2017 and have quickly turned it into one of the fastest growing blogs in retail.