AI is rapidly altering the retail and e-commerce scene, improving customer experiences, optimizing operations, and accelerating corporate growth. Over 60% of business leaders believe AI may improve customer experiences and create a significant competitive advantage. Approximately two-thirds expect their generative AI budgets to grow in the next six months.

Nonetheless, Future Commerce’s “State of AI x Commerce Report” reveals that, despite understanding the value of AI, most merchants are not yet utilizing it to its fullest potential. Businesses who fail to capitalize on AI’s latent potential risk losing ground to their competitors.

AI’s underutilized and lost chances

Staying ahead is critical to retail success, but despite AI’s potential for improving consumer experiences and operational efficiency, many businesses are hesitant to completely adopt it. The sharp contrast between the promise of AI and its present use highlights a difficult reality.

Much of the hesitancy to fully embrace AI derives from a lack of trust in the technology’s ability to produce consistent, trustworthy results. More than half of retail business executives agree they do not fully trust AI technology. The issue is exacerbated by the lack of a well-defined regulatory framework for AI, raising issues about transparency, accountability, and ethical application. Given that just approximately one-third of firms have created standards for generative AI deployment, the lack of regulatory guidance forces teams to handle AI implementation largely independently.

Furthermore, while 56% of retail teams regard AI as a motivator for innovation and efficiency, 44% see it as a possible threat to traditional procedures and roles. This includes concerns that incorporating AI into current systems will cause operational problems.

A clear road forward

Despite these hurdles, there is a clear road forward for the retail industry to fully fulfill AI’s potential, beginning with tiny use cases that have a significant impact.

From marketing to merchandising, retailers should assess which areas of efficiency will benefit their staff (and business results) the most. Consider how much important time is spent on manual chores or positions that could accomplish so much more if they had the bandwidth to think strategically.

Consider this: only 17% of survey respondents in the retail business actively use generative AI to supplement their SEO tactics, 11% for data analysis, and 15% for campaign personalization. These are only three examples of how generative AI may improve productivity and have a stronger impact on the customer experience.

And each of these use cases keeps the human in the loop, which helps to alleviate AI worries and distrust. While AI can help filter and analyze data, a merchandiser would select what strategies to implement based on those results, taking into account their specific skills and understanding of the business. AI clearly powers outstanding e-commerce experiences, but the human touch elevates them.

Why merchants should embrace AI

Retail has experienced many of new technology, so what distinguishes AI? Why is it necessary for retailers to bridge the gap between knowing AI’s value and implementing it to recognize that value?

It everything boils down to growth. In 2022, just 20% of total retail sales occurred online. That implies there is still a huge opportunity for retailers to drive income through digital platforms. AI is the key to unlocking that potential, offering:

E-commerce is fast-paced, therefore every minute counts. Generative AI can swiftly personalize content, evaluate customer behavior, and do other regular activities, saving retail personnel time and allowing them to focus on strategic objectives.
Scalability: Businesses may employ AI to spread personalization (and consequently better experiences) across their client base, boosting the possibility of a purchase for millions.
Expertise: How can you offer hesitant customers the confidence to make a purchase? Generative AI will eventually enable merchants to deliver individualized product expertise and recommendations – digitally — to each customer.
Retailers may already grasp the benefits of AI for their business, but now is the time to take action. AI is already transforming the retail landscape as we know it. Those who don’t seize the opportunity now will be left behind tomorrow.