COVID-19 Pushing the Adoption of AI in Retail
Technology is evolving at a pace that is difficult to keep track of, especially the increasing adoption of artificial intelligence (AI) in retail. AI is helping retailers better meet the needs of their customers, advancing operational efficiencies and, most importantly, improving the bottom line. As a retailer, you will be aware of the success stories of those who have adopted AI and automation to compete in what is becoming a very complex marketplace. There is little doubt that this is a growing trend, and that AI is rapidly taking center stage for the major brick-and-mortar retailers, like Walmart and Target, and for the majority of eCommerce retailers. But just how prevalent is AI beyond that? We combed through published studies and analysis from only trustworthy sources to get a clear picture. Below are just the highlights of what we found and what the reports and surveys revealed about the growth of AI in retail:
What Have Studies Revealed About the Growth of AI in Retail?
$10 billion – The annual estimated increase in spend on AI in the end-to-end supply chain over the next 4 years according to Statistica.
85% - The percentage of senior merchant leaders who are currently in the process of adopting AI, or who plan to, over the next two years according to a study carried out by the Research Management Group (RMG) in 2020.
40% to 50% - The estimated percentage of the merchant planning process and decisions that are automatable with today’s current technology, according to a McKinsey global survey “The State of AI in 2020”.
The top 4 expectations/benefits for AI according to Statistica:
- Reduced costs
- Increased productivity
- Increased sales
- Better decisions
$340 billion – The estimated amount saved by taking AI to scale across the value chain according to a report by Capgemini.
12% - The percentage of senior merchants with no plans to adopt AI according to a survey of 200 retail executives carried out by RMG in 2021.
The top 4 reasons given for not planning to adopt AI according to RMG research:
- Lack of expertise to manage a pilot
- Cost seems high
- Data is too unorganized for it to be feasible
- Don’t understand the benefits of AI
70% - The percentage of retail executives who claim to have a good understanding of AI.
The Time to Implement AI is Now
The traditional retail approach to conducting business is rapidly giving way to new technologies, especially AI. This is a trend that has been developing over a long period and has recently been accelerated by the worldwide disruption brought on by COVID-19. The emergence of eCommerce and new delivery channels has compelled the brick-and-mortar operations to deliver a better, seamless customer experience, something that is too complicated to achieve with the old approaches. The 12% of retailers that have no plans to modernize their operations with AI will certainly need to reconsider that strategy as they will face increasing pressures from competitors better positioned to meet the demands of customers. Those who are moving in the direction, but perhaps slowly, should consider updating their roadmap with AI as a higher priority and with a greater sense of urgency.