RESEARCH REPORT
Retail reinvented: Unleashing the power of generative AI
5-MINUTE READ
June 20, 2024
In brief
- The generative AI revolution is here—and with it, bringing unprecedented change to the retail industry.
- This technology is not only reshaping the customer and employee experience, it’s also creating opportunities for growth and efficiency across the business.
- The window of opportunity is open. It’s time for retailers to stake a claim and act now to capitalize on this opportunity.
Reinventing retail in the age of generative AI
The retail landscape is undergoing a transformative shift with the integration of generative AI. It’s creating unprecedented opportunities for enhancing customer service and boosting operational efficiency. Retail leaders are proactively increasing their investments in generative AI, recognizing its potential to revolutionize every aspect of the industry—from inventory management to customer interaction. As this technology advances, it is crucial for retailers to adapt and innovate, ensuring they harness the full potential of AI to remain competitive and meet evolving consumer expectations.
75%
of retail executives view generative AI as instrumental to their business’s revenue growth.
93%
of retail CxOs are planning to scale up their investment in AI and generative AI over the next 3–5 years—in terms of time, money, and human capital.
50%
of all working hours across retail have the potential to be impacted by generative AI.
Transforming how consumers shop
Generative AI is set to redefine the shopping experience by personalizing consumer interactions and automating routine purchases. Imagine AI systems that predict a family’s needs, restock household essentials before they run out, or suggest new products tailored to personal tastes and preferences. This level of personalization not only enhances convenience, but also builds deeper consumer loyalty. Retailers like Instacart are already leveraging AI to simplify shopping, suggesting recipes and delivering the necessary ingredients directly to consumers’ doors.
Reshaping how people work
The adoption of generative AI in retail is not just transforming the consumer experience, but it’s also changing the workplace. AI tools equip retail employees with data-driven insights, enabling them to offer personalized customer service. For instance, store associates can use AI to access real-time inventory data or customer preferences, enhancing the quality of customer interactions. This shift is expected to redefine roles, requiring a focus on reskilling and continuous learning to prepare the workforce for a more technology-integrated job environment.
Reinventing how the business operates
Generative AI—coupled with classic AI and machine learning (ML)—is advancing retail operations by streamlining both back-office and customer-facing processes. AI-driven analytics help with forecasting demand more accurately, optimizing inventory levels and managing supply chains more efficiently. This leads to reduced operational costs and improved customer satisfaction. Retailers are also using AI to enhance decision-making processes, ensuring they can respond more swiftly to market changes and consumer needs, thereby maintaining a competitive edge in the fast-paced retail sector.
The five imperatives
To fully seize the generative AI opportunity, retail leaders must address these five imperatives.
Shift the focus from siloed use cases to prioritizing business capabilities across the entire retail value chain, based on an objective assessment of the business case, enterprise readiness and the corresponding return on investment.
Invest in technology that runs seamlessly and allows for continuous creation of new capabilities.
Set and guide a vision for how to reinvent work, reshape the workforce and prepare workers for a generative AI world.
Design, deploy and use AI to drive value while mitigating risks for all retail stakeholders, from consumers to suppliers and workers.
Because change is constant, reinvention never ends. Make the ability to change a core competency and part of company culture.
The time to act is now
The opportunities for generative AI to transform the retail industry are endless. It holds the potential to deliver greater value to customers, workers and the business by meeting the five imperatives above. As we look ahead, your company can fade, follow or lead. Choose to lead.