How to build a retail AI roadmap

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This article is brought to you by Retail Technology Review: How to build a retail AI roadmap.

Recognising where AI will have the most impact is key to retailers building their strategies for development, says Alexander Goncharuk, VP of Retail at Intellias.

Change is all around, in the retail business, in the consumer landscape and in technology advancement. What this does is give retailers lots of choice over ways to move ahead, but at the same time it is tougher to decide which actions, initiatives and investments will have the greatest and most meaningful impact or ROI.

Everyone is reacting differently.  Some companies have jumped on the Artificial Intelligence (AI) bandwagon to see where it takes them, while others are hesitating, almost paralysed with fear that they might make a bad decision. 

The best place to start is with the data and in two key areas – where AI is likely to have the most positive impact and where it is most likely to be embraced by consumers.  Our recent survey, conducted among over 1,000 UK shoppers in December 2023, sheds light on the various facets of AI that impact the shopping journey for UK consumers and underscores the strategic importance for retailers in recognising where AI can deliver the most value.

Topping the list is Pricing and Promotions, with 28% of respondents acknowledging the significance of AI-driven automated pricing and real-time promotions in enhancing their buying journeys.  Following closely is Loyalty, with 18% expressing appreciation for real-time personalised rewards generated by AI. Product Discovery (17%), AI-generated Product Information (17%), and AI-driven Product Recommendations (15%) also feature prominently.  Additionally, AI-powered Chatbots, at 14%, prove to be a disruptive force, as indicated by 25% of respondents.

Chatbots as disruptors

AI-powered chatbots emerge as the most disruptive automated experiences in UK shoppers' buying journeys.  A quarter of respondents label chatbots as the most disruptive application of AI during shopping, and 23% identify interactions with AI-powered chatbots as the stage where they are most likely to abandon a purchase.  This sentiment is echoed by the Institute of Customer Service, linking frustration with dysfunctional chatbots to a decline in overall customer satisfaction.

Despite the disruption caused by AI-powered chatbots, the majority of consumers (69%) express a willingness to accept AI for automating repetitive tasks, provided it does not replace human interaction.  An overwhelming 74% believe that a blend of AI automation and human interaction will always be necessary in retail, emphasising the importance of striking the right balance for a seamless shopping experience.

The research reveals that 42% of UK shoppers are aware of retailers using AI in their buying journeys.  For 61% of consumers, transparency in AI usage is crucial, while 52% prioritise a positive shopping experience over whether it involves AI.  The study also highlights a growing adoption of Generative AI (GenAI) tools, with 45% of UK consumers already using them in their day-to-day lives.

Despite the evident benefits of AI, the survey uncovers wariness among shoppers, with 43% expressing mistrust of brands and retailers using AI in their shopping experiences.  This underscores the need for transparent communication about AI implementation to build and maintain consumer trust.

As the hype around Generative AI (GenAI) continues to accelerate, both consumers and retailers are adapting to its presence in day-to-day interactions.  The key to delivering AI-powered value lies in ensuring transparency, seamless integration, and adherence to robust compliance procedures. Recognising the strategic importance of these elements will be crucial for retailers navigating the evolving landscape of AI in 2024.

Where retailers can be less cautious is in optimising across the product and new product development life cycle, from orders through allocation and assortment to markdowns and disposal.  Each process can be improved using AI, with continuous improvement as more variables are added.  There will be some sensitivities over adoption because many of these processes are split across multiple departments, with dependence on both manual and automated processes.  AI brings the promise of enabling each department to improve their performance using data and insights drawn from the entire lifecycle.  At the very least, this will reduce the need for promotions and markdowns that have been forced as a result of over or understocking.

In conclusion, as AI becomes more deeply embedded in the retail experience, retailers must carefully consider the deployment of these technologies throughout the entire value chain.  By understanding consumer preferences and concerns, embracing transparency and maintaining a delicate balance between automation and human interaction, retailers can harness the true potential of AI to enhance customer experiences and drive business success.

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