Retail leaders express doubts over their existing AI competence, according to EY's findings.
Major retailers such as Best Buy, Walmart, Lowe's, and Home Depot are increasingly leveraging Artificial Intelligence (AI) and analytics to drive innovation and gain a competitive edge. A recent survey, conducted among 500 consumer products and retail executives, 20,000 consumers, and almost 200 CEOs, reveals that these strategies are becoming the norm for business leaders.
## Enhancing Consumer Experiences
Retailers are incorporating AI into shopping tools and search experiences to make it easier for customers to find products and receive personalized recommendations. For instance, Best Buy is using AI to optimize its search engine, while Walmart has acquired AI startups like Zeekit to offer virtual try-on capabilities for clothing, allowing customers to see how clothes fit virtually and reducing returns.
Lowe's and Home Depot are also using AI to enhance customer service through chatbots and in-store digital assistants, helping customers find products and get advice on home improvement projects.
## Strategic Decision Making
Data-driven inventory management is a key strategy for retailers. By forecasting demand, identifying best-selling items, and adjusting inventory levels in real time, retailers can optimize product assortment and inventory, reducing the risk of overstocking or understocking.
Market basket analysis is another tool used to optimize store layouts and refine marketing strategies. By analysing customer purchase patterns, retailers can increase cross-selling opportunities and design effective promotions.
## Marketing and Operations
AI is also being used to automate tasks in marketing and operations. Walmart, for example, is using AI to create digital ads, expanding its online marketing capabilities and reaching a wider audience.
In terms of operational efficiency, AI is used to automate tasks such as inventory management and supply chain optimization, reducing labor costs and improving productivity.
These strategies allow major retailers to stay competitive by enhancing customer experiences, optimizing operations, and driving business growth through data-driven insights.
Interestingly, while over three-quarters of retail leaders believe that innovation requires analytics and AI, fewer than one-third believe their current capabilities in analytics and AI give them a competitive advantage. This suggests that while AI is becoming more prevalent, there is still room for improvement and competitive differentiation.
The survey results were published in May by EY. It appears that AI, data, and analytics are becoming increasingly important for retailers, with over half of retail leaders planning to use AI for labor cost reduction through automation, and the remaining 46% aiming to use AI for improving employee productivity.
In conclusion, the retail sector is undergoing a digital transformation, with AI and analytics playing a significant role. As these technologies continue to evolve, we can expect to see more innovative applications and strategies in the retail industry.
- Best Buy and Walmart are leveraging AI to optimize their search engines and offer virtual try-on capabilities for clothes, respectively, aiming to provide ease for customers when finding products and receiving personalized recommendations.
- Lowe's and Home Depot implement AI-driven chatbots and digital assistants to support customers with product finding and home improvement advice, ultimately improving the customer service experience.
- By employing data-driven inventory management and market basket analysis, retailers can optimize product assortment, store layouts, and marketing strategies, ultimately reducing risks of overstocking or understocking and increasing cross-selling opportunities.
- AI is used to automate tasks in marketing and operations across industries, with Walmart utilizing AI for digital ad creation and operational efficiency improvements like inventory management and supply chain optimization, thus reducing labor costs and increasing productivity.
