Retailers are buying into artificial intelligence in a big way, but they are discerning customers. A new study conducted by Oxford Economics for Synchrony Financial shows retail executives are counting on AI to transform their companies and their industry—while remaining skeptical about the enormous hype surrounding the technology.
Oxford Economics surveyed 324 executives across seven US retail sub-sectors in late 2018. The study shows that most retailers are in the early stages of AI adoption, but that momentum is building rapidly. Early leaders are focused on getting strategic value from AI—and are seeing a range of business results.
Among the survey’s key findings:
- Nearly three-quarters of respondents say artificial intelligence will be a competitive necessity for their company in the next five years, a figure that rises to 90% of early adopters.
- Nearly half of respondents say the application of AI will have a transformative impact on their business.
- Just 13% of respondents agree or strongly agree that current AI applications live up to the hype, with early adopters even less likely to say that reality matches marketing.
Retail executives understand AI as an enabler of multiple technologies with discrete applications, including machine learning and predictive analytics, chatbots and intelligent agents, and robotic process automation (RPA). They are implementing different tools according to their needs.
The report considers the maturity of implementation of AI tools in retail businesses:
- 41% of respondents said chatbots or virtual agents were “implemented in some parts of their business,” “implemented broadly,” or “well-integrated into operations.”
- 40% said that robotic process automation (RPA) was in one of these three stages of implementation.
- 36% said machine learning/predictive analytics was in one of these stages of implementation.
Both online and brick-and-mortar retailers look to AI to improve the customer experience, personalize marketing campaigns, and automate inventory and supply-chain logistics. Larger companies are ahead of their smaller competitors in AI adoption.
More than half (55%) of retailers surveyed say AI has provided substantial or transformative value on speed of customer complaint resolution, and over half report value from their AI initiatives in the form of revenue growth. The impact on profitability is not large to date, but two-thirds expect AI to make their organization more profitable in three years.
“Retailers are counting on AI to remake a sector already facing meaningful disruption,” says Matthew Reynolds, one of the research leads at Oxford Economics. “There are significant challenges—for leading companies, a shortage of relevant skills, for smaller retailers a budget crunch, and for everyone questions about the technology’s maturity. But this is happening, and it’s happening now.”