TikTok, Gen AI and the Next Chapter in Commerce

Lindsay Lightman, a principal at Dallas-based venture capital firm RevTech Ventures, is at the forefront of identifying and investing in technological innovations that shape the future of retail and supply chain. During a session titled “VC Perspective on the Future of Retail & Commerce,”  Lightman shed light on how the next generation of shoppers, particularly Gen Alpha, are engaging with brands and what it means for the future of physical and digital retail.

Gen Alpha and Social Commerce

Gen Alpha, the youngest emerging cohort of consumers, is growing up in a world where digital and physical shopping experiences are deeply intertwined. Social commerce, particularly on platforms like TikTok, is becoming a primary way they discover and interact with brands. “As people discover and shop via TikTok, what does the future of physical retail look like?” Lightman says. While the answer remains uncertain, it’s clear that the relevance of physical retail must evolve to cater to these digital-first consumers. The key is creating experiences that resonate with their social and interactive shopping habits.

AI and Retail Investments

RevTech Ventures takes a unique stance by not directly investing in AI. “We’re not looking for generative AI; it’s organically becoming part of almost every business out there,” Lightman states. This perspective recognizes that AI is naturally integrating into various aspects of business operations, from inventory management in grocery stores to personalized shopping experiences in fashion and home goods through tools like the “Complete the Look” feature from FindMine, one of RevTech’s portfolio companies.

The Role of Human Touch in Tech

Despite the integration of AI, Lightman emphasizes the importance of maintaining a human touch. Theatro, for instance, provides an in-ear device for retail associates, enhancing customer service by offering real-time assistance and access to extensive product information. “It helps floor associates be better customer service reps from day one instead of day 20,” says Lightman. This blend of AI and human interaction ensures that the technology serves to enhance, rather than replace, the human elements of customer service.

Sustainability Challenges and Solutions

Sustainability is a core focus for Lightman. The retail industry, being a significant contributor to waste, faces immense pressure to adopt sustainable practices. However, the financial weight of sustainability initiatives, such as costly recyclable fabrics and energy and carbon tracking, poses a challenge for many brands. “Philosophically they want to be a sustainable brand, but they can’t shoulder the financial burden,” Lightman explains. The goal is to find solutions that help brands reduce their environmental footprint without eroding their revenue.

The Future of Physical Retail

With the rise of social commerce, the role of physical retail is being redefined. Consumers, especially younger generations, are less likely to shop in traditional department stores and more inclined to follow their friends’ recommendations on social platforms like TikTok. This shift necessitates a reevaluation of physical retail spaces, making them more experiential and aligned with the digital behaviors of consumers. “There’s always going to be a space for physical retail, but what does that experience look like in the future?” says Lightman. The answer lies in creating spaces that are interactive, engaging, and seamlessly integrated with digital channels.

Investing in Retail Media and Supply Chain Efficiency

RevTech Ventures is also eyeing potential investments in the retail media space. With the high cost of customer acquisition, leveraging unique and authentic influencer partnerships can offer a more cost-effective strategy.

Additionally, Lightman hopes the industry focuses not just on flashy innovations like Gen AI but on optimizing supply chain efficiency to better allocate inventory, reduce waste, and respond more quickly to consumer demand. “A lot of people are spending a lot of energy on the backside of sustainability, in the recommerce space,” Lightman notes, highlighting the importance of reducing the retail sector’s environmental impact. Some 70 percent of retail products end up landfilled, she adds, emphasizing the industry’s outsize footprint.

Lightman underscores the transformative power of technology and sustainability in shaping the future of retail. By balancing AI with human touch, addressing sustainability challenges, and redefining physical retail spaces, innovative startups can help retail pave the way for a more efficient, engaging, and environmentally conscious industry. The future may be uncertain, but with thoughtful investment and innovation, it holds the promise of a retail landscape that meets the evolving needs of the next generation of shoppers.