AI as an emerging trend for managing employee efficiency in the retail and services industries

Generative artificial intelligence (generative AI) is transforming the nature of work, offering clear benefits in efficiency and innovation. Yet, for practitioners, adoption remains complex because of limited resources and current operational demands. This study examines how firms manage these challenges by analyzing AI adoption through the lens of the exploration-exploitation trade-off. Using data from public company filings, we analyze the drivers and barriers of adoption, links to R&D investment, and industry-specific patterns. We find that larger firms with low employee efficiency are eager to adopt AI. Adoption rates also correlate with changes in the scale and focus of R&D spending. Notably, retail and services firms—among the least efficient in terms of labor productivity—are leading in AI uptake. However, their focus remains on automating routine tasks and expanding product offerings, rather than investing in workforce development. These results provide useful guidance for leaders seeking to utilize AI in industries struggling with employee productivity.