Unpacking AI Service and Customer Engagement in Indonesian Retail: The Mediating Role of Intention and The Moderating Role of Trust

This study investigates the impact of Artificial Intelligence (AI) service on customer engagement in the Indonesian retail industry, with intention as a mediator and trust as a moderator. A quantitative research design was employed using Structural Equation Modelling–Partial Least Squares (SEM-PLS), with data collected from retail customers across Indonesia who had experience using AI-based services such as chatbots, recommendation systems, and virtual assistants. The findings reveal a significant positive impact of AI service on customer engagement (p < 0.001). Furthermore, intention played a significant mediating role between AI service and customer engagement (p < 0.001), supporting the Theory of Planned Behaviour. Contrary to theoretical expectations, trust was not a significant moderator between AI service and intention (p = 0.331), nor between intention and customer engagement (p = 0.337). The proposed model explained 43% of the variance in customer engagement and 49% of the variance in intention, indicating moderate predictive power. The non-significant moderating role of trust suggests that Indonesian consumers may have developed high trust in digital technologies due to the rapid growth of e-commerce and digital financial services, or that the utilitarian nature of AI services reduces the salience of trust as a boundary condition. These findings offer both theoretical and practical implications regarding the implementation of AI service. Theoretically, the study extends the Theory of Planned Behaviour to AI service adoption in emerging economies and questions trust's generalizability as a moderator. Practically, retailers should invest in AI capabilities and foster positive customer intentions.