AI is transforming the retail and e-commerce landscape with remarkable speed, elevating customer experiences, optimizing operations and propelling business expansion. Over 60% of commerce leaders agree that AI can boost customer experiences and provide a distinct competitive edge. Approximately two-thirds expect their generative AI budgets to increase in the next six months.
Still, Future Commerce's "State of AI x Commerce Report" finds most retailers are not yet using AI to its greatest potential — despite recognizing its value. And businesses failing to seize AI's untapped potential are inadvertently losing ground to their competitors.
AI's under utilization and missed opportunities
Staying ahead is the key to retail success, yet despite AI's potential for optimizing customer experiences and operational efficiency, many companies remain hesitant to fully embrace it. The stark contrast between the promise of AI and its current adoption underscores a challenging reality.
Much of the reluctance to fully embrace AI stems from not trusting the technology to deliver consistent, reliable results. Over half of retail industry professionals admit to not trusting AI systems completely. The issue is compounded by the absence of a well-defined regulatory frame-work for AI, leading to concerns about transparency, accountability and ethical usage. Given that only about a third of companies have established guidelines for generative AI usage, the lack of regulatory direction leaves teams to navigate AI implementation largely independently.
Moreover, while 56% of retail teams see AI as a motivational force driving innovation and efficiency, 44% view it as a potential threat that could disrupt established processes and roles. This includes the fear that integrating AI into existing systems could cause operational disruptions.
A clear path forward
Despite these challenges, there's a clear path forward for the retail industry to fully realize AI's potential, and that starts with the small use cases that make a big impact.
From marketing to merchandising, retailers should take stock of the areas where efficiency would benefit their teams (and business results) most. Think of where valuable time is being spent on manual tasks, or roles that could achieve so much more if they had the bandwidth to think strategically.
Consider this: Only 17% of survey respondents within the retail industry actively employ generative AI to bolster their SEO strategies, only 11% use it for data analysis, and just 15% use it for campaign personalization. These are just three instances in which generative AI can drive massive efficiency gains and even greater impacts on the customer experience.
And each of these use cases keep the human in the equation, helping to mitigate AI fears and distrust. While AI can help sort and analyze data, for example, it's a merchandiser who would decide what strategies to enact based on those findings, factoring in their unique expertise and understanding of the business. AI undoubtedly drives exceptional e-commerce experiences, but the human touch perfects them.
Why retailers need to embrace AI
Retail has seen its fair share of new technologies, so what makes AI any different? Why is it so critical that retailers bridge the gap between understanding AI's value and actually adopting it to recognize that value?
It all comes down to growth. In 2022, only 20% of total retail sales took place online. That means there is still tremendous potential for retailers to drive revenue in digital channels. AI is the unlock that will allow them to reach that potential, offering:
- Efficiency: E-commerce is fast-paced, and every minute matters. Generative AI can quickly personalize content, analyze customer behavior and complete other routine tasks, saving retail professionals time and allowing them to prioritize strategic initiatives.
- Scalability: Companies can use AI to scale personalization (and thus, better experiences) across their customer base, increasing the likelihood of purchase for millions.
- Expertise: How can you give unsure customers the confidence to make a purchase? Generative AI will ultimately allow retailers to provide personalized product expertise and guidance — digitally — for every customer.
Retailers may already understand what AI can do for their business, but now is the time to act on it. AI is already changing the face of retail as we know it. Those who aren't taking advantage of it today will be the ones left behind tomorrow.