Given the numerous advantages of AI in retail, it is beyond dispute that artificial intelligence is revolutionizing nearly every aspect of the retail consumer experience.
In fact almost every U.S. retailer, 92%, intends to expand AI investment in the next year, according to a Lucidworks generative AI benchmark study.
According to a Juniper Research study, the global retail expenditure is expected to increase to $7.3 billion annually by 2022, a significant increase from the $2 billion spent in 2018. Thus, artificial intelligence technology is on the brink of widespread adoption.
By 2024, AI investment is expected to reach $110 billion, according to an IDC forecast.
The primary reason that approximately half of retailers have a positive attitude toward AI and only 12% have a negative one is the benefits of AI in retail, as indicated by the study.
The list of advantages of AI in retail is extensive and extensive, ranging from business opportunities to automation to efficiency advances, and the most significant of all: customer experience enhancement.
Advantage of AI: Customization
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. Retailers have experienced some initial successes one year into their voyage. It will be critical for them to scale these use cases, with a concentration on ROI, to maintain pace with the evolving expectations of shoppers who are rapidly incorporating generative AI into their daily lives.”
Additionally, Bain research indicates that consumers have a higher level of confidence in AI for personalized shopping recommendations than they do for any other use case. Bain anticipates that the productivity of retail employees could be increased by up to 25% as a result of Gen AI enhancements that alter the way they work on the front line, in warehouses, and at headquarters.
Efficiency is a benefit of AI.
From the retail store floor to the warehouse, retailers are adopting AI. A robotic system that packages foodstuffs is one of the most recent innovations on the supermarket floor. The packaging procedure at self-checkout stations is being automated through the use of cameras, AI, and grippers, as reported by Popular Science. The design is being developed by MIT researchers.
The robot’s AI and camera collaborate to recognize objects on a conveyor belt. The grippers use pressure sensors to assess an item’s constitution. Soft fruits, such as grapes, are set aside, while soup cans are bagged first. The technology separates out from previous robotic baggers by preventing injury to delicate produce, according to the news outlet.
At BJ’s Wholesale Club, a robot named Tally utilizes a suite of sensors to traverse the entire store footprint and aisles on a daily basis, operating in close proximity to store associates and consumers. 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.
Advantage of AI: Profitable expansion
Deloitte’s February report, “Future of retail: Profitable growth through technology and AI,” suggests that establishing a personal relationship with the contemporary retail consumer can result in substantial benefits.
The report revealed that with personalization brands can achieve advantages across the spectrum, from 18 % lower acquisition costs to 20% higher customer spend and 30% higher customer satisfaction.
Deloitte discovered that 91% of executives consider AI to be the “top game-changing retail technology” in the next three years. Additionally, by 2025, 20% of the world’s largest retailers will utilize distributed AI systems to achieve holistic results.
“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 adore it
According to Deloitte, consumers are enthusiastic about experimenting with AI in retail, as 92% are eager to try it or have already experienced it through an interactive in-store display. This is a significant factor contributing to the numerous benefits of AI in retail.
“Technology is of paramount importance in this transformation; it is no longer merely a tool; it is the fundamental foundation upon which retailers must construct in order to satisfy the expectations of contemporary consumers and ensure the success of their investments.” AI is revolutionizing retail, offering personalized recommendations and solutions, with 71% consumers expecting tailored experiences. Ramanathan stated in a press release regarding the Deloitte findings that this indicates a transition to experiential engagement that extends beyond transactions across consumer contact points. “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 delineated a series of advantages of AI in the retail sector. The following is an overview of the report’s findings:
Supply chain optimization: Adoption of IoT and AI to optimize supply chains. AI aids in predictive analytics for demand forecasting, while IoT devices track inventory in real time, providing valuable data for inventory management. This trend is fuelled by the need for retailers to reduce costs, minimize waste, and respond promptly to market changes.
Retailers integrate AI and IoT technologies to establish seamless omnichannel experiences. A consistent and convenient purchasing experience is crucial for retailers, as consumers frequently transition between online and physical locations. This can be achieved by synchronizing online and offline channels.
Improved security and fraud detection: AI and advanced analytics are implemented to enhance security and fraud detection. These technologies have the capacity to detect suspicious transactions and prevent larceny in both physical and online stores, thereby safeguarding profits and fostering consumer confidence.
Future Prospects: The Deepening of AI
According to a Honeywell survey, the global retail industry will be significantly influenced by the AI adoption surge in the upcoming year. Given that only 35% of retailers report utilizing these technologies on a broad scale, this represents a significant change. AI, ML, and CV were designated by nearly half of the respondents (48%) as the top technologies that are anticipated to have a substantial impact on the retail industry within the next three to five years.
Retailers are not considering the technology as a means to reduce personnel costs and reduce the size of their workforce. They perceive the technologies as a means of enhancing the retail consumer experience and complementing and enhancing the workforce.