Is AI moving from debate to deployment in retail circles?
Consumer financial services firm Synchrony gathered insights from more than 300 retail decision-makers and released its findings in a new report, “Shopping for AI.”
As with any new technology, retailers considering artificial intelligence applications fall into distinct camps: early adopters and cautious followers. Those taking the wait-and-see approach might have one good reason to stop pondering and start doing: 55 percent of retailers that have implemented AI tech told Synchrony they’ve already seen a “substantial increase” in revenue as a result.
Still, given all the hype around AI, many retailers are skeptical of what this tech can actually deliver—and just 13 percent believe AI applications on the market right now live up to their promises. Even fewer in the first mover group are satisfied with what AI software says it can do versus what it really achieves.
However, early adopters seem to have a better grasp of what AI means for their future. Ninety percent in this group believe AI holds the potential to become a competitive advantage for their business, the report noted, while 72 percent of all respondents see AI as aiding their company over the next five years. For close to one-third, it’s already created “meaningful value,” according to the report.
Most have an eye on their bottom line, especially as competition increases from threats like digitally native startups and vertically integrated brands. In fact, 66 percent see AI bolstering their profits in the next three years, 4 percent more than those who believe AI will enhance revenue growth.
AI for retail is still in its infancy and merchants are picking their battles accordingly.
In line with the 80 percent that see AI changing the online customer experience, most (41 percent) are dipping their toes in the water by deploying chatbots or virtual agents for customer service support, though robotic process automation (40 percent) follows closely. Machine learning trails with 36 percent of retailers indicating they’ve implemented the technology.
Asked why they’re incorporating AI into their retail businesses, 48 percent of respondents said they’re catering to what their customer base expects, based on the demographic’s income level or preference for certain kinds of products and features. Less than one-fifth (18 percent) expect AI will help them improve the relevance of their marketing initiatives today, though that figure rises to 22 percent when looking ahead three years. Fourteen percent see AI as enhancing their merchandise offering in the near term, though an additional 5 percent see it paying off in the next 36 months.
There’s plenty of runway left when it comes to retailers making the most of AI’s ability to maximize data insights. While 64 percent said AI helps them gather data from customers, a far smaller amount—40 percent—leverage this data to better predict a customer’s future behavior.
What’s surprising is the 20 percent that have no AI adoption plans at all.
So what’s standing in the way of AI going fully mainstream in retail? For starters, many business can’t decide on what their AI deployment priority should be, as 23 percent told Synchrony their top challenge is that they can’t make up their mind about where to start. The same percentage claimed that options on the market aren’t quite where they should be, and another 16 percent can’t get the budget needed to start implementing AI.
All that considered, it remains to be seen whether AI will be the technology that helps level the retail playing field, though some respondents seem to think so. With AI doing much of the heavy lifting with mundane, automatable tasks, 58 percent are banking on this technology helping them better compete with larger, deep-pocketed rivals.
“AI is one of the most disruptive technologies for the retail industry—impacting supply chains, customer service and payments,” said Greg Simpson, Synchrony’s CTO and AI leader. “Investing in AI technology is no longer optional for merchants, but some may struggle with leveraging the insights in the most effective way to glean true outcomes. Synchrony is helping its partners tap into this growing opportunity to compete and win in the data-driven digital economy.”
Synchrony worked with London’s Oxford Economics to survey 324 retail executives and gauge their plans for and expectations of artificial intelligence tools specific to the retail industry for the “Shopping for AI” report.