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Diving overview:
- More than 8 in 10 retailers are incorporating artificial intelligence into their operations to some extent or to a large extent, according to a report from Berkeley Research Group released on November 12th.
- North American retailers are now using AI for tasks such as marketing (70%), IT and digital functions (62%), digital commerce (56%), and merchandising strategy and pricing (54%). In the future, they plan to deploy technology in planning and product flow (40%), corporate operations (38%), supply chain and procurement (36%), and distribution and logistics (32%).
- However, the use of AI does not necessarily lead to measurable business benefits. AI tools like ChatGPT and Copilot can complete simple tasks such as writing product descriptions and marketing copy, but it remains unclear whether such capabilities are driving noticeable changes for retailers, the report notes.
Dive Insight:
As more AI companies emerge, Berkeley Research Group recommends that companies should prioritize AI investments that address specific business problems. The report cites several key performance indicators to measure the benefits of AI, including improvements in average order value, inventory turnover, revenue, customer retention, and labor efficiency.
“Companies should fit AI into clearly defined target operating models, rather than forcing technology into what they already do,” the report advises. “AI is not cheap and the payback period varies significantly. Retailers must have a clear roadmap with a clearly defined business case, ROI, and pilots to test and launch their AI initiatives.”
As major retailers are among the first to invest in AI, Berkeley Research Group is warning. Sam’s Club, for example, is using an AI-powered scan-and-go smartphone app to authenticate purchases as it reinvents checkout at its 600 stores, according to the report. Last year, the wholesale retailer opened a store in Grapevine, Texas, without checkout lanes and required shoppers to use an app.
Last month, Levi Strauss & Co. partnered with Microsoft to implement a “complex agent framework” across various functions within the company, including IT, human resources, and operations. Similarly, Walmart debuted its own artificial intelligence framework in July. It centers around four super agents. Supplier, Seller, Advertiser Partner Agent Marty. Clerk agent. Agent for corporate technology developers. Retailers plan more professional development subagent Over next year.
Meanwhile, Target is implementing AI as part of its strategy to boost sales and traffic. The retailer uses generative AI to generate new ideas for sellers using its AI platform, Target Trend Brain. The retailer is also using AI to evaluate vendors applying to join its third-party marketplace platform, Target Plus, Target’s chief information and product officer Pratt Vemana said in an interview with Retail Dive in October.
The retail industry is implementing various AI-powered strategies, but the impact on the industry is not fully understood. Retailers are experimenting with AI in areas such as search and product recommendations, while also trying to understand how AI will impact their businesses in the long term.
