Retailers have been using generative AI (gen AI) tools for over a year now, long enough for nearly every retailer to see the undeniable power of this new technology. New research from Bain & Company shows that generative AI at scale can rapidly improve productivity and ease pressure on profit margins across the industry through a variety of cost savings.
“From conversational search to personalized apps, Generation AI is reshaping retail in ways faster and more transformative than smartphones and the internet ever could,” he said. Mikey Vu“A year into their efforts, retailers are seeing some early successes. It will be critical for retailers to expand these use cases with a focus on ROI to meet the evolving expectations of shoppers who are rapidly adopting generative AI into their daily lives,” said Marcus McClellan, partner in Bain & Company’s retail practice.
Personalized Shopping Experience
One very promising use case is personalizing customer experiences through tools like AI-powered conversational shopping assistants, enhanced search, and localized shopper recommendations. Bain has found that these use cases at scale could boost retailers’ revenues by 5-10% overall. Underscoring this point, Bain research found that consumers trust AI more for personalized shopping recommendations than any other use case.
Automated Marketing Content Generation
Retailers may already be experimenting with using generative AI to enhance and streamline marketing efforts with promising results. Executives who incorporate these efforts into broader efforts to automate the generation of marketing materials in areas such as content translation and reuse, social media, and the creation of dynamic, personalized landing pages will see even greater results. This broad family of use cases is estimated to increase marketing productivity by 30% to 40%.
Cheerful employees
Bain estimates that productivity will increase by up to 25% with generative AI enhancements that will change the way retail employees work on the front line, in the warehouse and at headquarters, including automated stock checks and replenishment alerts, and a search assistant for real-time problem resolution.
The first year of the generative AI era has also forced retailers to think hard about its long-term impact. One concern is that big tech companies will get too involved in earlier stages of the shopping journey, like inspiration and curation. Another is that retailers will be pushed aside by digital insurgents who are quicker to implement generative AI in compelling ways.
To harness the full potential of AI, retailers need to ensure their deployments pass the test in three areas:
- Change management. In the midst of these changes, retailers need to keep in mind that a complete redesign of work may be required, both on the frontline and at the corporate level, and that making improvements now may also drive future evolution.
- DemocratizationTo move from experimentation to large-scale rollout, retailers need to provide AI tools to all employees, not just technical departments, but also centralize AI-related functions to avoid duplication of effort and other inefficiencies.
- talent. Gen AI implementation best practices will likely quickly become outdated, so retailers should focus on upskilling their existing employees and helping them continually update their workforce with new skills in technology-related roles and across the organization.
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