If there was any lingering doubt about the crucial role technology, particularly generative AI, will play in the future of the retail sector, it was thoroughly dispelled by SAP customers during the National Retail Federation’s (NRF) annual Big Show in New York in January.

Retailers are looking at new technology tools like AI to help them move into new channels and discover new growth streams, enter new markets and find new ways to engage with consumers, and work with suppliers to find efficiencies in their supply chain, Kristin Howell, SAP’s global vice president of Retail Solution Management, said.

“There is a tremendous market out there for retailers to utilize AI and improve their business processes,” she said during an open theater session at the SAP booth during the show.

Over two days, retailers who came to the SAP booth spoke about the challenges they face, talked about data, data management, and the opportunities presented by AI, and heard about how new solutions and services from SAP tailored specifically to the retail sector can help them become more efficient and serve their customers better.

SAP officially launched the SAP S/4HANA Cloud Public Edition, retail, fashion, and vertical business solution at the show. The new solution helps centralize operational data and can integrate finance, procurement, and merchandising processes.

“Whether you’re a franchisee with a handful of stores or the biggest retailer out there, there’s a certain level of complexity that comes with running any retail business, especially with consumers who expect a very flexible fulfillment experience,” Howell said during a press briefing. “In order to really fulfill these expectations profitably and meet the needs of these consumers, we believe that this retail-tailored ERP solution is going to make the difference for them.”

SAP also announced plans to bolster its retail offerings with two new tools—a refreshed loyalty management cloud service and a generative AI assistant designed to give store employees and consumers an easier way to find what they need.

SAP S/4HANA Cloud Public Edition retail, fashion, and vertical business is available immediately, while the shopping assistant, which is based on Joule, SAP’s unified copilot, will be released during the first half of 2025. 

The shopping assistant is designed to make recommendations and help shoppers find what they are looking for more easily while also helping store associates close sales. Because it can be integrated into the retailer’s ERP system, users can discover specific information, like the current availability of stock.

The new loyalty management application takes data from SAP S/4HANA Cloud and applies AI to create profiles around customers and their shopping behavior and preferences.

Howell identified the customer experience in retail, including product recommendations and helping consumers search, “as areas where retailers can start consuming AI.” She also expects retailers to be early adopters of AI tools to help with their pricing strategies and to use generative AI copilots, including SAP’s offering, to ask questions and get answers immediately—about inventory for example—wherever they are.

While it’s still early days in terms of adoption, almost every retailer presenting in the SAP booth theater at the show said they are preparing to implement AI tools and some said they are already testing AI tools in specific use cases. And SAP’s retail team made it clear at the NRF show that SAP is ready to help.

They say “good things take time,” but sometimes it’s wise to not wait too long and take matters into your own hands. This is especially true when those “matters” have the power to determine business risks or give you a competitive edge, such as plastic regulation.

The world has been waiting for a global plastics treaty since 2022, when representatives from 175 nations agreed on a mandate to create a legally binding instrument to end plastic pollution. While progress has been made during the five rounds of negotiations to date, a final treaty has yet to be agreed. With negotiations set to continue, SAP has collaborated with Earth Action to launch the “Shift into Gear” report, inciting companies not to wait but to start preparing now to meet global plastics legislation.

It’s not just a reporting duty

Plastics regulation isn’t new. It has rapidly spread across the globe like a rising tide, driven by the urgency to reduce our dependence on fossil fuels and curb the plastic waste that is choking both marine and land-based ecosystems. Companies now face the growing tide of extended producer responsibility (EPR) regulations and pay plastic taxes in certain jurisdictions. Globally, the corporate liabilities linked to plastic usage are projected to exceed US$20 billion by 2030.

In this shifting landscape, SAP and Earth Action argue that plastic and data management are no longer reporting duties only, but fundamental business imperatives. Companies that fail to navigate these waters may find themselves sinking under the weight of financial liabilities, whereas those that prepare, comply with regulations, and leverage digital solutions will ride the wave, standing to gain a competitive advantage.

Disparate EPR regulations make compliance onerous and expensive

Originally designed to fund waste management, EPR regulations are now focused on the eco-design and recyclability of items. Complications for corporations arise from the variety of different EPR regulations across different territories. The report describes how one consumer goods company operating in over 180 countries can face a minefield of 30 to 50 different EPR policies, which could cost in the region of 0.5%-1% of final product revenue. For multinational corporations, this can add up to millions of euros of risk—or opportunity.

Avoidance isn’t a viable option. Non-compliance comes with significant financial risks including fines, litigation, and potential clean-up costs. Reputational risk linked to consumer protection violations, false advertising, and environmental damage is also a factor that could result in revenue loss and a decline in investor confidence.

SAP joins forces to lobby for standardization

SAP is working with the World Business Council for Sustainable Development (WBCSD) and the Ellen MacArthur Foundation, calling for industry alignment on packaging data. Together, we are pioneering a project to enable standardized data to be exchanged throughout supply chains. This can allow businesses to access and analyze materials from a variety of suppliers to empower the design of more sustainable and recyclable packaging, which can minimize waste and reduce EPR fees and plastic taxes.

Negotiations to finalize the global plastics treaty are expected to resume with delegates due to convene for INC 5.2 in 2025.

Companies should not delay

The report is clear. Companies must not wait for a finalized treaty before taking action. With a myriad of national and regional regulations already in existence, including the EU’s Packaging and Packaging Waste Regulation (PPWR) and the Corporate Sustainability Reporting Directive (CSRD), there is already work to do. Delaying compliance may leave companies lagging behind and unable to meet existing and upcoming regulations, leading to the financial and reputational risks already mentioned. Under the PPWR, for example, the penalties for non-compliance are not just theoretical—they are a looming reality. Each EU member state can impose sanctions that are effective, proportionate, and dissuasive, ranging from hefty fines to sales bans or mandatory product recalls because of non-compliant packaging. In other words, the clock is ticking and the consequences of inaction could hit harder than anticipated.

Early adopters stand to benefit from their experience and will be better prepared for the shifting regulatory field when the treaty enters into force. By proactively implementing robust data management solutions and streamlining their reporting processes, they can start to make gains in terms of circularity and sustainability. In doing so, they will obtain an unprecedented view of their plastic material flows, allowing them to unlock efficiencies and reduce risk.

Data management is critical

Contrary to an often referred to argument put forward by treaty detractors, the data organizations require for compliance does exist and can be found within existing enterprise systems. Companies should look to their enterprise resource planning (ERP) systems and financial reporting platforms. These are treasure troves, filled with procurement records, supplier data, and waste management information—key assets for reporting purposes.

Businesses should also coordinate with their suppliers and customers with a view to data sharing for resource optimization and to scale efficiencies.

Data management systems like SAP Responsible Design and Production help companies collect and use data by aggregating it from third-party systems. It can not only allow sustainability managers to accurately calculate fees and taxes but can give them a lifecycle view of indirect taxation costs and, by considering downstream recyclability and recycled content, the environmental impact of design choices. The solution can also allow users to experiment with switching materials, products, and altering supply chains, providing them with the information they need for agile decision-making.

Prepare for an ambitious treaty

Corporations must invest in their enterprise systems to leverage data and collaborate with their supply chain to meet upcoming legislation and avoid risks and penalties of non-compliance. The sooner they start, the better their competitive advantage. By utilizing data management systems to collect robust data and collaborate with supply chains, they will be equipped to thrive in the era of plastic regulation, limiting their costs, achieving sustainability targets, and complying with evolving regulations.

Read the full Shift into Gear report here.

Darren West is global head of Circular Economy Solutions at SAP.

When Joseph Weizenbaum created the world’s first chatbot in 1966, user reactions alarmed the MIT professor.

People were confiding their deepest thoughts to the chatbot and experts predicted that within a few years, conversations with chatbots would be indistinguishable from those with humans. It certainly took more than just a few years, but here we are at the edge of another stage of AI evolution.

Evolution of AI agents

Artificial intelligence has evolved significantly since 1966, advancing from basic rule-based systems to highly autonomous decision-making systems.

In the 1990s and early 2000s, rule-based chatbots relied on predefined keyword responses but lacked the ability to adapt to complex queries. By the 2010s, intelligent virtual assistants such as Alexa and Siri enhanced user interactions and introduced AI into everyday life through smart home integrations. In the 2020s, task-specific AI agents began to emerge, each tailored to perform specialized tasks. For instance, AI-driven personal finance assistants can analyze spending patterns and suggest savings plans, while AI-powered content moderation tools scan social media platforms to identify harmful content.

Looking ahead, autonomous AI systems are rapidly advancing. Multi-agent systems, composed of multiple independent agents, can collaborate to achieve a complex workflow beyond the ability of an individual agent. Tasks are coordinated between agents, as opposed to individual agents that often require human coordination and intervention between tasks. For example, in manufacturing, AI agents can independently optimize production lines, while in healthcare, AI systems are assisting in surgery by making real-time adjustments during procedures. Autonomous systems are also being deployed in logistics to manage inventory and optimize warehouse operations without human intervention.

Expanding capabilities of agents

Today, AI agents are like super-efficient digital teammates — smart systems equipped to perform tasks autonomously, learning from experience and adapting along the way.

Today’s agents have core capabilities like these:

• Planning: Agents go beyond executing single actions; they orchestrate processes, breaking down complex problems and mapping out efficient, step-by-step approaches.
• Reflection: Unlike traditional software, agents reflect their actions in real time and learn from mistakes. They self-correct and iteratively reason through the problem until they find the best solution. This capability allows them to handle more irregular, complex challenges, makes them more effective over time.
• Tool Usage: AI agents can use external tools — like calculators, APIs, databases, and even other AI models — to expand their capabilities, broadening the scope of tasks they can accomplish.
• Collaboration and Multi-Agent Interactions: Agents aren’t limited to working solo. They thrive in cooperative ecosystems, coordinating with other specialized agents and humans, leveraging their unique expertise to achieve a shared goal.

Why is AI agent innovation accelerating at this moment?

The answer lies in the remarkable advancements in foundation models. These models allow AI to handle complex data and produce outputs like code, text, or media that are tailored to specific tasks. They enable systems to think through problems deeply and autonomously, mirroring human cognitive processes.

For instance, the latest reasoning models like OpenAI’s o1 and o3 are game changers. They do not just perform tasks; they use real-time computing power to “think” and generate human-like outcomes. And the progress is mind-blowing: o3 scored over 80 percent on a human-like reasoning test while its predecessor, GPT-4o, scored only two percent on the same test just one year earlier.

With such rapid advances, AI agents are getting better at automating and enhancing business decisions, truly pushing the limits of what autonomous systems can achieve.

What makes SAP unique in this space?

SAP Business Suite offers a unique advantage in the era of agentic AI. It is not just a collection of solutions; it’s a powerhouse for transformation that boosts continuous innovation. Here’s the simple breakdown:

• Applications: With SAP Business Suite, cloud ERP applications, SAP Business AI, and SAP Business Data Cloud come together to deliver exceptional business value — all powered by SAP Business Technology Platform (SAP BTP). In this way, SAP’s business applications and technology platform aren’t siloed tools; they integrate processes end-to-end. This integration ensures that every action taken within these applications is based on trusted, business-critical data at its source.
• Data: All the data, whether from SAP or other systems, is collected and unified in SAP Business Data Cloud. This makes it a single, trustworthy source that breaks down data-silos and fuels advanced AI-driven insights. Because AI is only as good as the data you feed into it.
• AI: Joule helps employees coordinate intelligent agents to work together, breaking down barriers between functions and enabling real-time, company-wide improvements. Unlike others who might use AI in limited areas, SAP integrates AI throughout your entire organization, enhancing efficiency and resilience on a large scale.

SAP is in a unique position to turn AI agent technology into business value given the breadth of applications and data we offer, allowing automation of tasks along all key business processes. Our domain knowledge is grounded in real-world business data and our process know-how is maintained in SAP Signavio and SAP Knowledge Graph. Bringing it all together, our unified entry point with our AI co-pilot Joule enables us to use AI agents to automate processes and augment decision-making.

Joule agents are collaboration experts

Thanks to our fully integrated approach, we are designing a system of collaborative Joule agents that work within and across the suite to support every business function, solving complex challenges and driving cross-enterprise productivity. Businesses don’t need hundreds of AI agents, just the right ones with the right skills, grounded in the right data, with the right guidance from SAP’s end-to-end business processes.

Joule agents are available in all parts of the business, delivered out of the box with Joule and SAP’s suite of applications. This enables the transformation of entire business processes — end to end.

Agentic AI represents a transformative leap in business technology. By bringing together structured data management, seamless system integration, and advanced task automation, AI agents empower teams to operate with efficiency, accuracy, and agility.

SAP is taking the necessary steps for the next era of enterprise management by embedding systems of AI agents into SAP applications, fueled by context-rich business data, helping customers to realize the full potential of SAP Business AI.

Watch the video: How Joule Agents Work