Wednesday, April 24, 2024

AI already transforming retail sector

Retailers are buying into artificial intelligence (AI) in a big way, but they’re choosy and sceptical, says a new survey.

The Oxford Economics for Synchrony Financial survey found that retailers are counting on AI to “transform their companies and industry”. But they’re still sceptical about the enormous hype surrounding the technology.

Oxford Economics surveyed 324 executives across seven US retail sub-sectors in late 2018. The study shows that most retailers are in the early stages of AI adoption, but that momentum is building rapidly. Early leaders are focusing on getting strategic value from AI and are seeing a range of business results.

Key findings

  • Nearly three-quarters of respondents say AI will be a “competitive necessity” for their company in the next five years. This figure rises to 90 per cent of early adopters.
  • Nearly half of respondents say the application of AI will have a “transformative impact” on their business.
  • Just 13 per cent of respondents “agree” or “strongly agree” that current AI applications live up to the hype. For early adopters, the figure is even lower.

Key applications

Of course, AI is a catch-all phrase to describe a wide array of different technologies. So which ones are retailers actually using? According to the survey:

  • 41 per cent of respondents said chatbots or virtual agents were “implemented in some parts of their business”, “implemented broadly” or “well-integrated into operations”.
  • 40 per cent said that robotic process automation (RPA) was in one of these three stages of implementation.
  • 36 per cent said machine learning / predictive analytics was in one of these stages of implementation.

Reaping the rewards

The survey found that larger companies are ahead of their smaller competitors in AI adoption – unsurprising, perhaps, given the greater resources at their disposal.

They’re also beginning to see the benefits. More than half (55 per cent) report value from their AI initiatives in the form of revenue growth. Taking a longer view, two thirds expect AI to make their organisation more profitable in three years.

“Retailers are counting on AI to remake a sector already facing meaningful disruption,” Oxford Economics’ Matthew Reynolds said.

“There are still significant challenges. For leading companies, a shortage of relevant skills. For smaller retailers, a budget crunch. And for everyone, questions about the technology’s maturity.

“But this is happening. And it’s happening now.”

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