In the year 2005, businesses like Blockbuster (or Mr. Video if you lived in South Africa like me) and Gamestop flourished. No mall was complete without one of these stores, and for many, the highlight of the week was renting the latest DVD to watch at home. Back then, the internet was still a novelty and not nearly as accessible as it is today. Then, slowly at first, everything changed.

Suddenly, renting physical DVDs and games was no longer the only option. Online streaming services like Netflix and Hulu emerged, offering a more convenient and accessible way to watch movies and TV shows. These services didn’t just compete with DVDs; they fundamentally changed how people consumed entertainment.

And, sadly, these companies failed to adapt to the changing times.

Adapt or die

Fast forward to 2025. The old business saying “adapt or die” is hitting hard again, this time powered by Artificial Intelligence. The pace of change driven by AI arguably dwarfs even the early internet era. If your tech company lacks a real AI strategy, you’re essentially acting like one of those (doomed) stores from 2005, ignoring the massive wave about to hit.

Many retailers back then dismissed the internet, clinging to familiar models until it was too late. They paid the price. Today, AI is moving from a niche technology, something discussed in research labs, to a core part of the digital world. As Shopify CEO Tobi Lutke pointed out, integrating AI isn’t just a nice-to-have; it’s becoming a fundamental expectation in modern software. People will expect smarter features, proactive assistance, and personalized experiences that feel effortless. Failing to deliver will mean losing ground. (Read Tobi’s thoughts here).

”But I sell physical products?”

You might be thinking, “How will AI influence my business that deals in physical products?”. AI definitely won’t replace your physical goods, but it can significantly improve how your business operates across the design, marketing, and delivery processes.

Think about areas like:

• Customer service: Beyond chatbots, AI can analyze sentiment, predict customer needs, and empower human agents with instant information.
• Inventory management: AI models can forecast demand with far greater accuracy than traditional methods, factoring in seasonality, trends, and even external events. This can help to minimize costly overstocking or stockouts.
• Supply chain optimization: Identifying bottlenecks, optimizing routes, predicting potential disruptions – AI can bring a new level of intelligence and efficiency to complex logistics networks.
• Personalized product recommendations: Moving beyond simple ‘customers also bought’ to truly understanding individual preferences and predicting a customer’s future needs based on their behavior.
• Better fraud detection: AI algorithms can spot subtle patterns indicative of fraud far faster and more accurately than rule-based systems, protecting your bottom line.

Instead of large teams in different departments, a smaller team of specialists can automate much of this work with the help of AI tools. AI won’t replace your entire workforce – critical thinking and strategic oversight remain crucial – but it will make your operations leaner, faster, and more effective, freeing up valuable time to solve complex problems.

Don’t get caught off guard

AI accelerates everything. Development cycles are shorter, customer expectations evolve faster, and competitive advantages become easier to copy. What worked yesterday might be table stakes tomorrow. Waiting to adopt AI isn’t just delaying innovation; it’s actively choosing to fall behind.

Consider this: A competitor uses AI to streamline their logistics, drastically cutting delivery times and costs. Suddenly, your previously efficient operation looks slow and expensive (which has an impact on customer satisfaction and margins). Or another competitor uses AI for highly personalized marketing and customer service, building loyalty you simply can’t match manually. Ignoring AI means letting others define the future of your market while you play catch-up.

Conclusion

In the AI era, adaptation isn’t just about dabbling with a few tools or running pilot projects. It requires a clear plan and investment in technology and people (upskilling is crucial) and a fundamental rethinking of how your business creates and delivers value. If you wait too long or treat AI as just another IT project, you might find your company becoming the digital equivalent of an empty, forgotten storefront.