The Impact of AI-Driven Personalized Marketing on Customer Loyalty: Evidence from the UK Retail Industry

Abstract

This study seeks to understand the impact of AI personalised marketing on customer loyalty in the UK retail sector. The study relies on the Stimulus–Organism–Response (S-O-R) theory, in which the personalized marketing via AI is considered to be an external stimulus affecting the behavioural response of customers by enhancing the retail experience. The study employed a quantitative, cross-sectional survey design, with 300 valid responses from UK retail consumers that had experienced AI-driven personalized marketing. SmartPLS software was used to analyze the data using Partial Least Squares Structural Equation Modelling (PLS-SEM). It was found that the effect of AI-driven personalized marketing on the customer loyalty is significant (β = 0.954, p < 0.001), has a large effect size (f² = 10.064), and has a high explanatory power (R² = 0.910). This research adds empirical evidence to the literature on AI marketing, as well as a contribution to the S-O-R framework. From a practical standpoint, the results suggest that retailers should embrace AI personalization in marketing startegies with a strategic approach, ensuring transparency, ethical data handling, and customer-centric implementation.