Artificial intelligence technology is on the cusp of huge adoption and the prime reason are all the benefits AI brings to retail.
There is no question or debate that artificial intelligence is transforming nearly everything when it comes to the retail customer experience given all the benefits of AI in retail
In fact almost every U.S. retailer, 92%, plans to expand AI investment in the next year, according to a Lucidworks generative AI benchmark study.
Artificial intelligence technology is on the cusp of huge adoption with global retail spend increasing to $7.3 billion annually by 2022 — quite a spike from the $2 billion spent in 2018, according to a Juniper Research study.
By 2024, AI investment is expected to reach $110 billion, according to an IDC forecast.
Benefits of AI in retail are the prime reason that just about half of retailers have a positive feeling about AI and only 12% have a negative sentiment, according to the study.
The list of benefits of AI in retail is long and expansive — from business opportunities to automation to efficiency gains and biggest of all: customer experience improvement.
Benefit of AI: Personalization
Consumers want a personalized experience and it’s estimated retailers using AI-powered conversational shopping assistants to drive a personalized shopping experience could boost revenue by 5% to 10%, according to Bain & Company research that also revealed Gen AI-powered productivity enhancement and cost savings could boost retailers’ already thin margins.
“From conversational search to personalized apps, gen AI is reshaping the retail landscape in a way that is going to be even faster and more transformative than the smart phone or the internet,” Mikey Vu, partner in Bain & Company’s Retail practice, said in a press release on the research findings. “A year into their journey, retailers have enjoyed some early successes. It will be critical for them to scale these use cases, with a focus on ROI, to keep pace with the evolving expectations of shoppers who are rapidly incorporating generative AI into their daily lives.”
Bain research also shows consumers trust AI for personalized shopping recommendations more than any other use case they were asked about. Bain estimates Gen AI enhancements that reshape the way retail employees work on the front line, in warehouses and at HQ could boost productivity up to 25%.
Benefit of AI: Efficiency
AI is being embraced by retailers from the retail store floor to the warehouse. One of the latest innovations on the supermarket floor is a robotic system that bags groceries. It’s being designed by MIT researchers and uses a combination of cameras, AI and grippers to automate the bagging process at self-checkout stations, according to a Popular Science report.
The robot’s camera and AI work in tandem to identify items on a conveyor belt. The grippers use pressure sensors to assess an item’s nature. Soft fruits, like grapes, are placed aside, while sturdier items like soup cans are bagged first. The technology stands out from previous robotic baggers by preventing damage to delicate produce, according to the news outlet.
At BJ’s Wholesale Club, a robot named Tally roams aisles, and the entire store footprint, several times during the day, using a suite of sensors, working right alongside consumers and store associates. The platform uses computer vision and AI-enabled shelf analytics captured by an autonomous robot called Tally to allow BJ’s to analyze products and price tags on even the tallest shelves to determine inventory stock as well as identify open storage areas where new inventory can be placed.
Benefit of AI: Profitable growth
Getting personal with today’s retail customer can bring some big wins, according to Deloitte’s report, “Future of retail: Profitable growth through technology and AI,” released in February.
The report revealed that with personalization brands can achieve benefits across the board, from 18 % lower acquisition costs to 20% higher customer spend and 30% higher customer satisfaction.
Deloitte found that 91% of leaders view AI as the “top game-changing retail technology” in the next three years and that by 2025, 20% of top global retailers will drive holistic results using distributed AI systems.
“From revolutionizing sales and marketing to optimizing supply chains and operations, AI will reshape how people buy and sell,” stated the report, authored by Anand Ramanathan, partner, consumer products and retail sector leader, Deloitte India and Praveen Govindu, partner, consulting, Deloitte India.
Benefit of AI in retail: Consumers love it
One big factor driving all the benefits of AI in retail is that consumers are embracing AI as 92% are excited to try it or have already experienced AI in retail via an interactive in-store display, according to Deloitte.
“Technology is pivotal in this transformation, no longer merely a tool but the essential foundation upon which retailers must build to meet the expectations of modern consumers and guarantee the success of their investments. AI is revolutionizing retail, offering personalized recommendations and solutions, with 71% consumers expecting tailored experiences. This signals a move toward experiential engagement beyond mere transactions across consumer touch points,” Ramanathan said in a release on the Deloitte findings. “By focusing on enhancing operational efficiency, improving customer experiences, and making informed decisions, retailers can secure a competitive advantage.”
Benefit of AI in retail: Supply chain optimization, omnichannel integration
The Deloitte study mapped out a list of benefits of AI in retail. Here’s a look at what the report revealed:
- Supply chain optimization: Adoption of IoT and AI to optimize supply chains. IoT devices track inventory in real time, providing valuable data for inventory management, while AI assists in predictive analytics for demand forecasting. This trend is fueled by the need for retailers to reduce costs, minimize waste, and respond swiftly to market changes.
- Omnichannel integration: Retailers integrate AI and IoT technologies to create seamless omnichannel experiences. By synchronizing online and offline channels, retailers can offer a consistent and convenient shopping experience, which is important as consumers move fluidly between online stores and physical stores.
- Enhanced security and fraud detection: AI and advanced analytics are employed for security and fraud detection. These technologies can identify suspicious transactions and prevent theft, both online and in physical stores, thereby protecting profits and enhancing customer trust.
Looking ahead: AI taking deep root
The adoption wave of AI will shape global retail in the next year, according to a Honeywell survey. It’s a huge shift given just 35% of retailers report using these technologies at a large scale. Nearly half (48%) polled identified AI, ML and CV as the top technologies expected to have a significant impact on the retail industry over the next three to five years.
Retailers aren’t eyeing the tech to shave workforce and reduce labor costs. They view the technologies as a way to complement and enhance the workforce while at the same time enhancing the retail customer experience.
