This thesis explores the challenges and opportunities in implementing and utilizing chatbot technology for customer service within large retail companies in Sweden. Utilizing a qualitative approach, the study gathers primary data through semi-structured interviews with key personnel from leading retail firms such as IKEA of Sweden AB, Telenor Sverige AB, Apotek Hjärtat AB, and Rusta AB. The research is framed by the Technology-Organization- Environment (TOE) framework, supplemented by insights from innovation implementation theories. 

The findings reveal various challenges in technological readiness, including integration with existing IT systems and IT systems of the external partners. It was identified a need for continuous training and updates of the chatbots technology. Training of advanced chatbot technology faces compliance with regulations like GDPR. Organisational challenges highlighted include the alignment of chatbot functionalities with business goals, investment in human and technological resources and the necessity of cross-functional coordination. Furthermore, external factors such as stakeholder feedback is crucial in shaping the implementation process. 

Despite these challenges, the study identifies substantial opportunities for enhancing customer service efficiency and experience through advanced chatbot capabilities, including Natural Language Processing (NLP) and AI-powered generative models. The results emphasise the importance of continuous improvement in accordance with customer experience and GDPR regulations for successful chatbots utilisation. 

This thesis contributes to the understanding of chatbot technology's role in modern retail, providing valuable insights for both academic research and practical application in digital customer service innovation.