The retail industry is undergoing a significant technological shift, with Artificial Intelligence (AI) at the forefront of this change. The recent “State of AI in Retail and Consumer Packaged Goods (CPG)” survey by NVIDIA sheds light on the adoption of AI in the retail sector and its burgeoning impact on business operations.
The comprehensive survey, which included over 400 global participants ranging from C-suite leaders to general managers, focused on AI’s role in retail. It covered a spectrum of topics, from AI applications and challenges to infrastructure investments and deployment models.
Key Findings: Efficiency and Revenue Growth
One of the primary findings is the emphasis on operational efficiency. Retailers are leveraging AI to adapt to changing customer preferences, address labor shortages, and enhance sustainability initiatives. The impact of AI is notably positive, with 69% of retailers reporting an increase in annual revenue due to AI implementation. In parallel, 72% observed a decrease in operating costs.
The survey highlighted the top five AI applications currently in use:
- Store analytics and insights
- Personalized customer recommendations
- Adaptive advertising, promotions, and pricing
- Stockout and inventory management
- Conversational AI
Despite these advancements, retailers recognize areas needing further exploration, including improving AI infrastructure, exploring the metaverse’s potential, leveraging AI in physical stores, and prioritizing data privacy in AI adoption.
Generative AI: A Catalyst for Customer Engagement
Generative AI, a key component in several top AI applications, is changing how retailers interact with customers. Its applications range from multimodal shopping advisors and adaptive advertising to product tagging and automated customer service through brand avatars. Notably, 86% of retailers expressed interest in using generative AI to enhance customer experiences, recognizing its potential to revolutionize engagement and streamline operations.
The survey underscores the importance of an omnichannel approach, integrating online and offline channels for a seamless customer experience. Ecommerce leads as the most utilized channel, with mobile applications bridging the digital-physical gap. However, physical stores remain crucial, cited by 30% of respondents as having significant revenue growth potential and being central to AI application.
The retail sector is poised to escalate its AI infrastructure investments, with over 60% of respondents planning to increase their investment in the next 18 months. This commitment reflects the industry’s acknowledgment of AI’s potential to enhance efficiency, reduce costs, and drive growth.