Retailers boost observability to reduce AI risks & outage costs
New research from New Relic has revealed that retailers are increasingly relying on observability to mitigate the risks associated with digital outages and to maintain high levels of reliability as artificial intelligence further complicates their technology environments.
The Observability Forecast for Retail & eCommerce, based on a survey of 147 retail and consumer engineering leaders and IT team members, found that critical business outages are a persistent challenge, with nearly one in three retailers experiencing such disruptions on a weekly basis. The financial impact remains significant, with the median hourly cost of a critical outage reported as USD $1 million-still a notable amount, even if it is half that experienced in other industries where the median is USD $2 million per hour.
Outages represent a considerable burden on technical teams. According to the report, 60% of engineers at retail organisations spend at least a fifth of their time managing outages, while 14% spend as much as half their work time or more responding to incidents.
The study also found retailers are generally quicker at detecting and resolving outages compared to other sectors. The median detection time for outages in retail is 30 minutes, with a median resolution time of 42 minutes. However, these figures still present significant revenue risks, especially during critical shopping periods like Black Friday and Cyber Monday, where any period of downtime can have outsized consequences.
ROI and retention
The report highlights that investments in observability are yielding tangible returns for retailers. Some 38% state that observability has directly improved revenue retention by providing deeper insights into customer behaviour. This understanding helps to drive both increased reliability and stronger customer loyalty.
A notable 46% of surveyed retailers reported that their spending on observability has delivered at least a twofold return on investment, with primary business benefits including improved system uptime, better efficiency, and enhanced revenue retention.
AI as a driver of observability
The adoption of AI has been identified as a key factor accelerating the uptake of observability solutions within the sector. As AI becomes more deeply embedded in retail operations and customer engagement, the complexity of digital systems increases. According to the research, half of retailers cited AI as the number-one reason for investing in observability-11 percentage points higher than the all-industry average.
Other major factors driving observability investments among retailers include the need for stronger security, governance and compliance controls, as well as better cost management and the ongoing challenge of maintaining high-quality customer experiences.
Consolidation of tools
Retailers are also moving toward unified technology platforms to enhance visibility across all their critical systems, such as eCommerce sites, payment solutions, fulfilment APIs, and infrastructure on public and private clouds. The risk of fragmented visibility is clear: system issues may go unnoticed, leading to lost revenue, customer defection, and reputation damage.
The report shows that 51% of retailers are currently consolidating their observability tools, reducing the average number of tools used from 5.9 in 2022 to 3.9 this year. Within the next year, half of all retailers plan further consolidation, and the proportion using a single tool for observability has climbed from 3% to 12% in the same time frame.
Industry perspectives
"Customers today expect seamless online shopping experiences, which means that business survival depends on operational efficiency and continuous uptime," said New Relic Chief Technology Strategist Nic Benders. "This year's Retail & eCommerce Observability Forecast shows that downtime is not just a technical problem-it's a brand and revenue problem. As AI becomes core to retail operations, observability gives teams the necessary visibility and confidence to keep every checkout smooth, every experience seamless, and every second of peak shopping protected."
The data suggests that retailers see observability as critical to their digital strategy, especially as AI and automation reshape the sector and as customers' expectations for reliability and speed continue to rise. As a result, observability is being adopted not only to manage technology issues but as a direct lever for protecting revenue and customer loyalty.
