Immersiveness in luxury retail through AI: balancing opportunities and risks for consumer psychological wellbeing

Purpose This research conceptualises how and to what extent artificial intelligence (AI) may integrate immersive virtual reality (IVR) and shape its impact on consumers' psychological wellbeing in the in-store luxury shopping experience. Design/methodology/approach An abductive methodology is adopted to explore the impact of IVR atmospherics on consumer psychological wellbeing. The findings are used to conceptually extend retail management processes through AI-IVR integration. Findings Consumers' psychological impacts are shaped by a composite interplay of sensorial, consumer-centric and technological factors that boost the in-store luxury shopping experience (luxury brand identity, learning, and recreational experience). IVR atmospherics fosters psychological wellbeing (activation, emotional connection, self-perception and relaxation) and psychological distress (dissatisfaction, cognitive load, self-unauthenticity, frustration, sensory distress). Building on this duality, this study discusses how AI-enabled adaptivity and assistance can be leveraged to manage immersive retail experiences, while warning against managerial risks related to hyper-customization, automation-authenticity tensions and AI system intrusiveness. Practical implications Retail managers should consider harmonising adaptivity. While using on the opportunity for customisation, brand consistency should be stabilised by defining variation corridors within which AI-driven customisation should happen. In addition, integrating hybrid assistance models (AI-human assistance) can improve efficiency while allowing authenticity and consumer engagement with the “materiality” that characterises the in-store shopping experience. Originality/value This study proposes an original framework conceptualising the relationship between in-store IVR atmospherics and consumer wellbeing and offers a critical discussion of AI–IVR integration and AI orchestration, advancing a conceptual understanding of AI capabilities, adaptivity and assistance, within luxury retail settings.