From eCommerce to mobile payments, the fast-paced retail industry thrives on emerging technologies. Enter generative artificial intelligence (AI) — an evolution that places retail at the forefront of innovation yet again.
This transformative tool doesn’t just adapt; it creates and delivers solutions, promising a new era of personalized, efficient and groundbreaking experiences that are redefining the game for retailers and consumers alike.
But it hasn’t been all smooth sailing. In the latest “Generative AI Tracker®,” PYMNTS Intelligence explores the complex set of challenges most businesses face when integrating generative AI into their retail technology stack, and why tackling these barriers is a critical step towards achieving seamless generative AI integration and widespread adoption.
According to the insights detailed in the report, by analyzing customer data, AI algorithms can decode individual preferences and deliver personalized recommendations, leading to increased customer satisfaction and loyalty. As a result, nearly 80% of retail industry business leaders rank generative AI as the most impactful emerging technology, with 92% of firms already using the technology to deliver tailored customer experiences in real time.
One illustration highlighting AI’s personalization prowess is Kohl’s recent initiative: the unveiling of its AI-powered Kohl’s Storybook, as reported by PYMNTS. This innovative solution allows customers to input details about themselves or their gift recipients, such as hobbies and interests. Using AI, the gift generator then crafts a unique, personalized story aligned with the recipient’s personality, adding a unique flair to their gifts.
Beyond personalization, generative AI plays a crucial role in optimizing inventory management. Per the study, retailers can leverage predictive analytics to forecast demand, improve stock optimization, and streamline supply chains. This ensures that they have the right products in stock at the right time, reducing inventory costs and minimizing the risk of stockouts or overstocking.
Luxury jewelry brand Pandora serves as an example. The Danish retailer recently announced a partnership with o9 Solutions, a provider of enterprise AI software platforms, aimed at optimizing its planning and merchandising processes. According to Kristofer Löhmos, a Pandora senior executive, the driving force behind this collaboration is the firm’s commitment to meeting consumers’ needs “by having the right product in the right place at the right time.”
AI also enhances customer service in the retail industry, with AI-powered chatbots increasingly being used by retailers to provide customer support and assistance. These chatbots can handle customer inquiries, provide product information, and even assist with purchase decisions, enabling retailers to reduce wait times and provide round-the-clock support to customers.
Among the companies embracing this shift is Yellow.ai, a provider of AI-powered chatbots and virtual assistants, which has recently selected Amazon Web Services (AWS) to power its generative AI-enabled solutions used by major retail brands including Sephora, Puma and Zalora.
Commenting on the deal, Yellow.ai Co-founder and Chief Product Officer Rashid Khan said that “swift, engaging and personalized interactions are key to successful outcomes” in the customer service industry, which is why migrating to AWS will enable the conversational AI solutions provider to “leverage price-performant generative AI solutions to make our dynamic AI agents even smarter and more intuitive to enhance the customer experience.”
While the advantages are evident, integrating generative AI into the retail technology stack isn’t without its hurdles.
The scarcity of skilled developer talent stands out as a key challenge, per the study, presenting a significant barrier for businesses aiming to embrace generative AI. As industry competition intensifies, retailers face the imperative of investing in talent and training to fully harness AI’s potential and leverage its many benefits.
This challenge is coming to light at a time when AWS has identified a surge in demand for AI talent, noting potential earnings up to 47% higher for those skilled in AI, the tech giant said in a Monday (Nov. 20) press release, per a PYMNTS report. To address this, Amazon’s newly launched initiative, called “AI Ready,” is offering free AI and generative AI courses to individuals of all expertise levels, complementing the 80-plus free AI and generative AI courses and resources already offered through its company AWS.
The tech giant has also committed to investing $12 million in generative AI scholarships through its AWS Generative AI Scholarship program to support over 50,000 high school and university students from underserved communities worldwide. Overall, the goal is to provide free AI skills training to 2 million individuals worldwide by 2025.
“Artificial intelligence is the most transformative technology of our generation. If we are going to unlock the full potential of AI to tackle the world’s most challenging problems, we need to make AI education accessible to anyone with a desire to learn,” the tech giant noted in the release.