The expectation paradox: Why retail tech is often a double-edged sword

It was my birthday recently (happy birthday to me!) and I’m at the age where my wife and I mostly self-gift and then let our kids pick out some fun little surprises.

Having a birthday right around the end of the financial year is helpful, as basically everything is on sale. So I went looking for some bargains, specifically warm overshirts for winter. After some searching, I found a great one from a well-known brand at half price…perfect!

I checked stock levels and found it available in my size in a department store at my local shopping centre, even better!

10 minutes later and I was in the store looking at it and found it…on a mannequin. After looking around for a staff member and eventually finding one (that’s another topic) I was informed that once the product was on the mannequin, it was in fact considered out of stock by the brand.

I was allowed to take it off and try it on for sizing, but I was not allowed to buy it because the system said it wasn’t actually there. In other words, the department store’s website thought it was in stock because it was indeed physically within the department store BUT the retailer’s systems said it was out of stock because it had been claimed by merchandising.

The result? The customer (me) holding a product with a barcode and price attached in their hand (and my credit card in the other) and being unable to buy it. The best I could do was try another store, which also said there was one in stock…but it may also be on the mannequin there.

While this is a somewhat unique instance, with a few layers, it is a useful example of what I’ll call the ‘expectation paradox’ and the experience it leads to called cognitive dissonance.

Let me explain.

The expectation paradox

The expectation paradox is pretty intuitive once you notice it, but the impacts on retailers can be relatively significant. Say a retailer does something new with technology. At first, it feels like magic. Remember when Amazon started suggesting books we might like? We’d be blown away.

Fast-forward a few years and now we expect our Spotify to read our mood, our coffee app to remember we’re lactose intolerant, and our banking app to somehow know we’re probably overseas when we buy something in another currency at 3am.

The key here is once you experience something once, you start to expect it. What we consider ‘normal’ increases to match our experiences, and it takes increasingly more to stand out.

We’re seeing this right now with AI. We couldn’t believe how amazing the first version of ChatGPT was at writing a few paragraphs, and now we’re disappointed if we can’t create a functional coding agent with an intuitive user interface in a few seconds.

In retail, think about deliveries and returns. Same-day deliveries and free returns started as a competitive advantage for a few pioneers. Now people get genuinely annoyed when their package takes more than 48 hours, and whenever a brand considers charging for returns, it makes the news and commentators like me debate if it’s a good idea.

Continually rising consumer expectations are challenging enough by themselves. It’s an even bigger issue when these expectations aren’t met, which leads me to cognitive dissonance.

The pain of cognitive dissonance

Cognitive dissonance isn’t a new idea. In fact, it’s been around since psychologist Leon Festinger described it in the 1950s. Basically, it’s the uncomfortable feeling you get when your beliefs don’t match your experiences.

Like when you think you’re an active gym-goer but haven’t been in weeks (this is me), or when you believe you’re a careful driver but you get a ticket for speeding (thankfully, this is not me).

Here’s the thing. Our brains really don’t like these contradictions. We like to feel like we understand things, and that our beliefs are generally true. When our beliefs don’t match reality, our brain struggles to reconcile the two, and that mental wrestling match creates genuine psychological discomfort. The bigger the difference between our beliefs and our experiences, the larger the discomfort.

Now apply this to my shirt example. I believe the shirt is in stock, because the website has told me so. I’ve physically seen it in-store, so my belief has been strengthened. Then, after holding the shirt in my hand, I’ve been told it’s actually not in stock because it’s been checked out for merchandising.

Cue my brain trying to reconcile my belief with the reality I experienced, feeling psychological discomfort (and annoyance) when I wasn’t able to do so, and me venting those feelings on a public LinkedIn post calling out the brand and retailer involved.

Now, should I as a retail researcher have known that stock levels are often incorrect? Rationally, yes. Yet customer experiences and feelings like cognitive dissonance aren’t driven just by rational thought. And stock levels aren’t the only way consumers experience these disconnects, which brings us back to the expectation paradox.

What happens when tech promises more than it can deliver?

Technology does a lot of amazing things for retailers and consumers, both in ways consumers see and behind the scenes. Don’t mistake this article as an anti-tech rant! At the same time, retailers and brands need to be conscious of what happens when technology advances and promises more to consumers, particularly if it doesn’t deliver.

Tech promises consumers personalised and relevant product recommendations, live updates on deliveries, and (in my case) accurate stock levels in stores. These are all amazing when they work. But when they don’t, it hurts more, because our expectations were higher to begin with.

Take my example again, but now imagine I’d been shopping in the ’90s, called a store and been told “you’ll need to come in to check”. If I had gone into the store and there was no stock, I wouldn’t have been thrilled, but I probably would’ve understood because I went in knowing there only ‘might’ be stock.

Compared with my current example, where I was told (and saw) there was stock. By raising my expectations, the tech (website with live stock levels) created a completely different level of psychological discomfort. Now, instead of being mildly inconvenienced, I’m frustrated, and may never trust that website again.

Now imagine these other examples:

1. The sold-out recommendations: You get an email with a curated selection of products. You click through excitedly to see what this clever algorithm has found, only to discover half the products are sold out, discontinued, or not available in your size. Your brain goes from ‘Wow, they really get me’ to ‘This is just spam with my name on it’ almost instantly.
   
2. Unfulfilled deliveries: You order something online and the sophisticated logistics algorithm confidently tells you it’ll arrive Thursday. You might not need it Thursday but now you’re expecting it and excited. Then as you check your phone you see it’s stuck in the distribution centre and rescheduled for next week. Excitement turns to disappointment and some of the joy of your new purchase is forever lost.
   
3. Click-and-collect that can’t be collected: You’re browsing online, find exactly what you want, and see that ‘free click-and-collect’ button. You go through the checkout process only to discover the nearest pickup location is three states away. Your free and convenient click-and-collect has become a paid delivery you’re not sure if you can trust.
   

Managing expectations

So what can retailers do about this? Does this mean stop using technology or promising consumers a good experience? Definitely not. As we’ve been discussing, consumers now expect these features. But there are two critical things retailers need to get right:

1. Managing expectations
   
2. Recovering when things go wrong
   

It’s about being honest about what your technology can deliver, not what it promises. If your inventory system isn’t truly real-time, don’t present it as if it is. Or if click-and-collect locations are limited, show customers where pickup is available before they get invested in the purchase.

The goal isn’t to under-promise everything, but rather to align what customers expect with what your systems can reliably deliver. That way, if it doesn’t work, the damage is mitigated.

Then if something does go wrong, match the recovery to the situation. A generic ‘sorry for the inconvenience’ email doesn’t address the specific psychological discomfort of having consumer expectations violated.

If your recommendation engine serves up sold-out products, follow up with similar items that are available. If your delivery algorithm failed, be transparent about what went wrong and offer meaningful compensation that acknowledges you disrupted someone’s plans. And if I’m standing in your store holding a product in my hand but your system says it’s out of stock, don’t make me go look for another one myself…sell me a shirt.

This story first appeared in the August 2025 issue of Inside Retail Australia magazine.

The post The expectation paradox: Why retail tech is often a double-edged sword appeared first on Inside Retail Australia.