AI transformation is ubiquitous, but ROI can be hard to achieve, at least in the short term. Some retail leaders are cautious about its implementation because they are skeptical of seeing a return. Says Ananda “Andy” Chakravarty, Vice President of Research at IDC Retail Insights, “While there are many immense problems that AI can impact, many executives find it daunting to integrate AI into existing systems and processes because the financial benefits seem elusive.”
The Long Game
Retail leaders can get frustrated when they don’t see financial or operational return after investing heavily in AI. But AI integration and deployment can be a long game, starting with data. Then it’s a matter of identifying and prioritizing opportunities within the organization where the impact of disruption/transformation will be most profound. Retailers need to take a strategic approach by methodically identifying areas for improvement where AI can have the greatest impact. It could mean starting with smaller projects for short term results paired with more difficult, longer term initiatives. For example, if a retailer doesn’t have electronic labeling, investing in dynamic printing and tagging won’t pay off, at least in the short term. What that means is finding the right areas to attack with AI is step one for any retail executive.
Adds Greg Petro, CEO of First Insight, AI’s potential in retail is a game-changer that’s still on the brink of being tapped by retail leaders. Our findings are a wake-up call for CEOs to bridge the gap with their teams, fostering informed strategies and agile data-driven decision-making.”
AI Drives Revenue
The financial incentives for executives are clear: according to recent reports, AI is responsible for driving as much as $40 billion of additional revenue in a 3-year span. And, as many as 80% of retail executives expect their companies will be using intelligent automation technologies by 2025. According to CIODive, more than half of C-suite leaders expect AI to save them money in 2024, according to a Boston Consulting Group survey of more than 1,400 executives across 14 industries.
Where’s the ROI
Of the areas where AI is most in demand, marketing, says Chakravarty, can really transform retail. With a plethora of innovative competitors providing shoppers with immersive shopping experiences, retailers can use AI to engage customers in a personalized and relevant manner. Imagine a system that can pull personalized copy assets and images for millions of online customer prospects and create a customized email campaign based on their own engagement, behavior and purchases. This exists now thanks to AI.
Four Benefits to Retailers
Retailers who innovate even while balancing their concerns about implementation will set themselves apart as market leaders. Here are four primary benefits from AI that retailers can count on:
Differentiation
Retailers can use AI to differentiate their products and offer consumers compelling services and experiences. By integrating predictive analytics, retailers can surprise and delight their customers.
Delivering Customer Insights
Faced with an onslaught of information from all aspects of their business, retailers can use AI to transform these disparate data sources into consumer-first strategies.
Synchronizing Offline & Online Retail
Treating digital and physical shopping channels as distinct business units adds friction for customers. Retailers can use AI to synchronize systems to create a seamless shopping experience.
Improving Supply Chain
In order to service a wider range of customer demands, retailers need to rethink their traditional supply chains in favor of flexible ecosystems that can quickly respond to consumers’ shifting behaviors. AI can help accomplish this.
