Purpose: This study investigates the factors influencing retail firms' intentions to adopt Artificial Intelligence (AI) to enhance customer retention and loyalty in Dhaka, Bangladesh. The research focuses on examining how perceived usefulness, perceived ease of use, competitive pressure, technological readiness, and organizational innovativeness influence retail entrepreneurs’ adoption of AI as a strategic tool for customer engagement. Research Methodology: A quantitative research design was employed, incorporating a hypothetical-deductive approach. The study utilized a cross-sectional design, drawing a sample of 250 retail firms through stratified random sampling in Dhaka. Data were collected using structured questionnaires and analyzed using statistical techniques to assess the relationships between the variables. Results: The study identified that all five factors perceived usefulness, perceived ease of use, competitive pressure, technological readiness, and organizational innovativeness positively and significantly influence retail entrepreneurs' intentions to adopt AI. These findings emphasize the crucial role of both technological and organizational dynamics in driving AI adoption decisions within the retail sector. Limitations: The research is geographically confined to retail firms in Dhaka, which may limit the generalizability of the findings to other regions or countries. Furthermore, the study's cross-sectional design restricts the ability to monitor AI adoption trends over time, indicating that future research could benefit from employing longitudinal designs and encompassing a broader geographical scope. Contribution:  This study provides valuable insights for retail managers and entrepreneurs seeking to leverage AI to enhance customer loyalty. It underscores the importance of fostering technological readiness and cultivating a culture of innovation within retail firms. The research contributes to the expanding body of knowledge on AI adoption in emerging markets, particularly concerning customer retention strategies in the retail sector.