The retail industry is in the midst of a major technological transformation, fueled by the rise of AI.
With the greatest potential for AI and analytics among all sectors, the retail and consumer packaged goods (CPG) industries are poised to harness the power of AI to improve operational efficiencies, enhance customer and employee experiences, and drive growth . It is therefore crucial to stay ahead of the curve by anticipating potential trends that aim to be game-changers in retail.
NVIDIA’s first annual “State of AI in Retail and FMCG“The survey – conducted among industry professionals – provides insight into the state of AI adoption in retail, its impact on revenue and costs, and the emerging trends shaping the future of the sector.
With more than 400 respondents worldwide, including executives and other executives, general managers and individual contributors, the survey included questions covering a range of topics related to AI, top use cases, biggest challenges, infrastructure investment initiatives and deployment models.
Improving operational efficiency is a top priority
To stay ahead of a highly dynamic market, retailers are actively considering how AI can help them respond to changing customer preferences, address labor shortages and boost efforts of sustainable development. AI has already been a game changer for retailers, with 69% reporting an increase in annual revenue attributed to its adoption. Additionally, 72% of retailers using AI saw a decrease in operating costs.
AI improves operational efficiency, improves customer experience and drives growth. The top five current use cases for AI were:
- Store Analytics and Insights
- Personalized customer recommendations
- Adaptive advertising, promotions and pricing
- Management of out-of-stocks and inventory
- Conversational AI
Even though retailers are actively implementing AI, there are still areas they are planning to explore. These include further investing in AI infrastructure to overcome challenges related to inadequate technology and lack of AI talent, exploring the potential of the metaverse for consumer engagement and operational efficiency while also leveraging AI for physical stores to deliver convenient and personalized customer experiences. , transforming the customer experience using Generative AIand ensuring data privacy and protection when adopting generative AI.
Generative AI is changing the customer experience
Generative AI has featured prominently in several of the top AI use cases for retail. Use cases ranged from multi-modal shopping advisors for personalized product recommendations; adaptive advertising, promotions and pricing; labeling and cataloging of products; identification of similar and complementary products; as well as the deployment of branded avatars for automated customer service.
Retailers have recognized the transformative potential of generative AI, with 86% expressing a desire to use it to improve the customer experience. Respondents recognized that integrating AI into business practices and solutions could revolutionize customer engagement, optimize marketing strategies and streamline operational processes.
Staying ahead with an omnichannel approach
To remain competitive, the survey highlighted the importance of an omnichannel approach integrating numerous online and offline channels to provide consumers with a consistent experience.
The results showed that e-commerce was the most used channel, with active participation of 79% of retailers. Mobile apps have also gained traction, with more than half of retailers using them to bridge the gap between digital and physical shopping experiences.
Despite the rise of digital shopping, 30% of respondents say physical stores offer the greatest opportunity for revenue growth (ranked second behind e-commerce) and remain the channel with the most use cases for AI for retailers. Given the emphasis on smart stores and their central role in the omnichannel experience, use cases such as store analytics and loss prevention will continue to be critical investments.
Investing in AI infrastructure
Although AI adoption is still in its early stages, retailers are committed to increasing their investments in AI infrastructure. More than 60% of respondents plan to increase their AI investments over the next 18 months. This commitment reflects the industry’s recognition of the potential of technology to improve operational efficiencies, reduce costs, improve customer experience and drive growth.
Download the “State of AI in Retail and FMCG: Trends 2024» report for in-depth results and insights.
Explore NVIDIA’s AI solutions and enterprise AI platforms for retail at www.nvidia.com/retail.
