According to one study, AI adoption in retail is expected to surpass 80% in the next three years. And predictive and prescriptive analysis investments are expected to double over the same period.
According to Mordor Intelligence, 40% of American retailers have already adopted AI in some form, and this number is projected to reach that 80% statistic over the next three years.
Despite this trend, data from the Retail Industry Leaders Association shows only 20% of retailers use data analytics to its fullest potential. There remains huge potential for customer-facing innovation through AI and data analytics. So while the rate of change is still impressive, what’s holding retailers back from adopting AI quicker?
Game-changing innovation
AI applications have the potential to change forever many aspects of retail, from supply chains, to physical and digital store operations, to marketing. This is why retailers are making significant investments in the technology.
AI applications can help retailers meet consumer demand for personalised offers and deliver them efficiently at scale. There are, however, a lot of unanswered questions. One of those is, when will this technology be ready for implementation?
The trend is towards a seamless omnichannel experience, integrating both physical and digital elements. AI is playing a role in reimagining these strategies, as companies explore its potential in retail marketing.
The right AI tools can harness the data retailers already hold to deliver real-time individualised offers based on thousands of metrics. Successful AI-powered data analytics creates a virtuous circle whereby AI multiplies feedback and improves the data to enhance the accuracy of predictive AI.
Loyalty strategies and gamification
Loyalty strategies can also be improved. According to Retail TouchPoints research, 61% of retailers focus on loyalty programme points to drive retention and loyalty. Naturally, customers want this process to be simple and engaging rather than a chore. Other than streamlining the earning and redemption process, retailers have turned to gamification to make it enjoyable.
Gamification turns the boring and mundane into something engaging and exciting. It’s why gamification has been estimated to increase customer acquisition by 700%. Another study discovered that gamification features boosted user engagement by 48%.
Who is getting it right?
AI’s role in driving efficiency is nothing new. Retail giant Amazon has been at the forefront of AI applications for some time. In February 2024, Bloomberg reported on Amazon’s AI-powered shopping tool, Rufus, that helps consumers comparison shop and get answers to more complicated queries.
This customer experience improvement enables shoppers to skip the time-consuming search engine use and quickly find products relevant to them via an interactive process.
AI-powered shopping tools like Rufus can increase purchase probability using the following process:
- Detecting shopping intent,
- Breaking down shopping intent into a of needs,
- Connecting those needs with the active product catalogue,
- Designing intelligent chat responses based on data from the catalogue.
Amazon is just one example. While AI in retail is far from reaching critical mass, many opportunities exist for retailers wanting to take advantage of this generational technological development. Retail chains worldwide have already made substantial investments in AI tools; Amazon alone announced a $4 billion AI investment in 2023.
An exciting journey ahead for AI-enhanced retail
Embarking on the path to AI mastery requires adopting AI’s promised competitive edge, developing a strategic approach to data optimisation, and collaborating with expert partners who can navigate the journey to an AI-enhanced retail future with you.
This article is an excerpt from the recent whitepaper, Eagle Eye’s AI Anthology, a resource that describes leveraging AI for personalisation and retail marketing. To check out the full document, full of data and insights from AI experts, follow this link.
Author: Jean-Matthieu Schertzer, Chief AI Officer, EagleAI
