Microsoft Unleashes Agentic AI to Turn Copilot Into a Full-Scale Shopping Engine

In January 2026, Microsoft unveiled a new generation of agent-driven artificial intelligence tools designed to reshape the retail experience from discovery to checkout. Built around the Microsoft Copilot ecosystem, the initiative aims to collapse fragmented shopping journeys into a single, intelligent flow—while simultaneously automating complex retail operations behind the scenes.

How Microsoft’s AI Is Changing the Shopper Experience

At the center of the rollout is Copilot Checkout, a conversational commerce feature that lets users explore products, receive tailored suggestions, and complete purchases directly inside the Copilot chat window—eliminating the need to jump between multiple apps or websites.

To enable frictionless payments, Microsoft has integrated Copilot with leading commerce and payment platforms such as PayPal, Shopify, and Stripe. This allows in-chat transactions for well-known retail brands including Urban Outfitters, Anthropologie, Etsy, and Ashley Furniture.

Retailers can also deploy custom shopping agents using templates available in Copilot Studio. These AI agents are designed to assist customers with tasks like outfit coordination, product discovery, and personalized recommendations in real time, closely mimicking the experience of a knowledgeable in-store associate.

AI Tools Powering the Seller Side of Retail

For merchants, Microsoft introduced several backend-focused AI agents aimed at improving efficiency and scalability:

Shopify Brand Agents act as brand-specific digital assistants, trained on a retailer’s product catalog and tone of voice. These agents handle product questions and customer support directly on the merchant’s website.

The Catalog Enrichment Agent, now in public preview, streamlines product onboarding by automatically extracting attributes from images, correcting metadata issues, and improving search visibility across digital storefronts.

Designed for brick-and-mortar environments, the Store Operations Agent allows retail staff to query inventory levels, manage staffing needs, and receive operational recommendations influenced by factors such as weather patterns and customer footfall.

Microsoft is also preparing to roll out the Dynamics 365 Commerce MCP Server in preview by February 2026, exposing critical retail logic—such as pricing, inventory, and order management—to AI agents for executing advanced workflows across both digital and physical environments.

Early Results and Business Impact

Early performance signals show meaningful gains. Microsoft notes that customer journeys involving Copilot result in 53% more purchases within 30 minutes compared to conventional shopping paths.

Merchants can measure and refine agent effectiveness using Microsoft Clarity, which tracks conversion uplift, average order value, and engagement across AI-powered touchpoints.

By Aaradhay Sharma