Does Anyone Know What’s Really Going On With AI In Retail? (We Might)
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Today, despite years of hype, confusion, and downright misinformation, practical concerns about AI/ML are very much on the minds of retailers. New sources of data are available to businesses from an increasingly digitized global marketplace, and the hope is that AI/ML technology can be used to turn those data into insights, and help retailers better understand the environments they operate in. As a result, we set out to study retailers’ attitudes about these very real-world opportunities in our latest benchmark report – Artificial Intelligence In Retail: Now What?
The following are some of the highlights of what they told us:
- Nearly half of our retail respondents chose the ability to identify trends that impact future objectives as their #1 use for business analytics, despite 12 different choices on offer. In an age of increased uncertainty, retailers can’t rely on gut feel to know what to do next, and they want the smartest math possible (AI) to be able to help them react. Quite simply, they want (and need) better tools to navigate uncertainly than what they currently have.
- The best performers, (those whose sales are already outperforming the norm) are FAR more bullish on AI and ML tools. 71% of the best performers say AI-enabled analytics will fundamentally change how they forecast their merchandise in the next three years (compared to only 44% of average and underperformers). This pattern extends to all kinds of decision-making processes, including supply chain planning and management (62% vs 48%) and store performance evaluation methods (56% vs. 40%).
- While retailers’ number one external challenge continues to be rapid shifts in consumer demand (46% choose it as their top priority from a list of 9 options), the biggest opportunity they see for greater use of AI-enabled analytics turns inward: 44% say they can use these advanced algorithms to help them react better to supply chain interruptions. Quite simply, retailers fear consumers – and rightfully so. But they think their best chance of upping their game (again, correctly) is to improve their own ability to react to the unthinkable. At all costs, they know they at least need to be able to provide the products they’ve promised that they can. No doubt, the COVID-19 pandemic has shaken our industry up, and AI-enabled analytics may well be one of the biggest benefactors of that dramatic change.
- As it relates to specific technologies, our response pool tells us that investment is coming slowly: but it is, indeed, coming – particularly for the best performers. Retailers are not moving as quickly to leverage these new tools as consumers might wish, but slow-and-steady increases in both the value and use of such AI-enabled interfaces as executive dashboards, exception reports and visual data models has steadily improved since we last conducted this research during the height of the pandemic in 2020. It is the ability to layer intelligence onto the structured data they are collecting from their legacy operational systems that holds their interest most: both right now, and in the coming future.
Based on our data, we also offer several in-depth and pragmatic suggestions on how retailers should proceed. These recommendations can be found in the Bootstrap Recommendations portion of the report. If you haven’t yet had a chance to read it, it’s available here, and it’s free to all.