New Relic Report Reveals Retailers are Turning to Observability Amidst AI Adoption

New Relic, the Intelligent Observability company, published its Observability Forecast for Retail & eCommerce report, detailing how retailers are leaning on observability to keep digital experiences running smoothly and meet rising customer expectations. The report, based on a survey of 147 retail and consumer engineering leaders and IT team members, shows that the median hourly cost of a critical business outage is $1 million. While still a significant hit to retailers, the cost is notably half the $2 million median hourly cost experienced by other industries. The State of Observability for Retail & eCommerce report is based on data from New Relic's 2025 Observability Forecast.

IT outages cost retailers both time and money

In high-stakes moments like Black Friday or Cyber Monday, every minute of downtime will have major consequences. The report found that nearly 1 in 3 retailers experience critical outages weekly. The cost of outages goes beyond lost revenue, as 60% of engineers spend at least a fifth of their time managing outages, and 14% said engineers spend half their time or more on incident response. The median time it takes for retailers to detect outages is 30 minutes, with a median resolution time of 42 minutes. Notably, this is faster than other industries surveyed but still carries with it a major revenue risk, especially during peak shopping events.

Retailers turn to observability to protect revenue

Retailers are recognizing that observability delivers clear business value, according to the report. Thirty-eight percent say observability has improved revenue retention in their organization by deepening understanding of customer behavior, showing that observability drives both reliability and loyalty. Forty-six percent of retailers report 2x or higher ROI on observability investments, citing improved uptime, increased efficiency, and stronger revenue retention as the top business benefits of the technology.

As retailers increasingly adopt AI to change how brands connect with shoppers, the complexity of their digital estates increases. The report reveals that AI is accelerating observability adoption, with half of retailers saying AI is the number one driver for observability-11 points higher than the all-industry average. The other most commonly chosen drivers of observability included security governance and compliance, followed by cost management and customer experience management.

Retailers double down on unified platforms for end-to-end visibility

Without unified visibility across e-commerce platforms, POS systems, fulfillment APIs, and cloud infrastructure, retailers risk system issues going unnoticed, which leads to lost revenue, customer churn, and damage to brand reputation. To improve the efficiency of their observability practices, 51% of retailers are consolidating their tool stacks-bringing the average number of tools down from 5.9 in 2022 to 3.9 today-and 50% are planning to consolidate within the next year. The number of retailers using a single tool has also jumped considerably from 3% last year to 12% this year.

"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."

New Relic's Retail Solution gives retail teams a clear view of what's happening across their systems so they can stay ahead of problems and keep things running smoothly when it matters most.

Download the The Observability Forecast for Retail & eCommerce report to learn more.