“Artificial intelligence (AI) offers the prospect of a frictionless existence, making us more efficient, helping us prevent mistakes, spotting the onset of potential problems before they become problems, and enabling us to spend more time on the things that really matter to us.” – Paul Clarke, CTO of UK-based online supermarket Ocado
Strategic planning for 2019 is underway as the new year unfolds. Findings from the holiday season, so far, appear cautiously optimistic as sales rose 5.1 percent to over $850 billion – the strongest in six years, according to a Mastercard report.
However, the itch for opportunity and disruption never subsides in an industry wrought with constant change. After years of navigating the tumultuous retail market, many brands are embracing advanced analytics and artificial intelligence (AI) technologies for a chance to resurface for a gasp of fresh air. Considered by Gartner “transformational” and “high-benefit” technologies, AI and advanced analytics will enable new ways for retailers to do business that will result in “major industry dynamic shifts” and “significant revenue increase or cost savings.” Here are four revealing findings about AI in retail you need to know going into 2019:
1. AI Global Annual Spending in the Billions
A recent report released by Capgemini’s Research Institute estimated that global annual spending on AI by retailers is estimated to reach $7.3 billion by 2022. All because such technology offers proven ways to significantly improve the customer experience and optimize operational and inventory efficiency.
2. More Retailers are Implementing AI
From the same Capgemini report, over a quarter (28%) of retailers were deploying AI in 2018. To put things in perspective, only 4% of retailers were deploying AI in 2016. As more and more retailers learn about the capabilities and use cases around advanced analytics and AI technologies, investments and adoption of such tools will continue to accelerate across the globe. In fact, some of the leading countries with the highest penetration of AI within retail include France and the UK, with over one-third of retailers deploying AI initiatives.
3. Big Retailers Take the Lead
Additional findings from the research also suggest larger retailers, with over $10 billion in revenue, are more proactive in adopting AI technology than other retailers in the space. Approximately 41% of the top 100 retailers surveyed responded they were currently working with AI.
4. AI Offers a Multi-Billion Dollar Opportunity for Retailers
How to go about determining which area to focus any new technology investment is one of the biggest hurdles many teams will experience – especially for one as extensive and potentially impactful as AI:
“Most [retailers] are focusing their AI efforts on sales and marketing, when there is a significant opportunity to unleash AI use cases across the value chain.” – Capgemini Research Institute
The Capgemini report estimated that retailers can save as much as $340 billion by taking AI to scale across the value chain. The hidden opportunities for retailers to utilize AI lie within many areas, including operations, supply chain, planning, product development, distribution, and more.
Is AI Right for You?
You’ve heard this before, but I’ll say it again: there is no silver-bullet solution. AI has a ton of potential across a number of different functions however prioritizing what matters to your business is crucial to getting the most out of any new technology. At Celect, we’ve had countless conversations with many different retailers about the challenges experienced in an industry undergoing an unprecedented transformation. Time and time again, the one thing everyone in this industry will agree on is that bottom line improvements require, first and foremost, a clear understanding and ability to adapt to customers’ ever-changing needs in advance. AI provides this capability; now is the time to start using it.
Are you going NRF 2019?
Interested in learning how to leverage AI for inventory optimization? Join Celect at NRF in NYC on 1/14 for our Big Ideas Session OR schedule some time to chat with our team at booth #1125.