Artificial intelligence (AI) is making itself right at home in the retail industry. In 2016, AI in the retail market totaled $712.6 million. By 2025 — less than a decade later — it’s projected to reach $27,238.6 million — a 38-fold increase — according to a February 2018 report by The Insight Partners.
Why such an astronomical increase? As anyone in finance or commerce today could reveal, change is in the air, and it’s no real surprise that things are likely to get more automated as time goes on. However, the Insight Partners report does call out a few specific trends driving this growth.
First, there’s the growth of the mobile market. The popularity of mobile shopping among consumers has pushed traditional retailers to reimagine their strategies for creating and capturing value, while digital players must also up their game to remain competitive with a lower barrier to entry in the space.
The second trend is closely tied to the first: As technological awareness and product choice expand, AI-based startups have proliferated to deliver to the industry the capabilities it needs to meet the rising expectations of the consumer base. These players really are the force driving acceptance of AI in the market, pushing game-changing technologies into use across the retail value chain, the report said.
Third, there’s the shift to omnichannel. As retailers strive to bridge the gap between online and offline commerce, artificial intelligence will have a key role to play as data from each channel informs more intelligent activity across the rest.
The omnichannel shift today is still in its early stages, but it’s sure to be old news by 2025, with the forces of the day driving new and different transformations. Until those forces become clear, however, omnichannel will continue to be a major effort among retailers — and perhaps it will remain the strategy in 2025 as well, simply with more channels to choose from and address than ever before.
The report noted that AI has many applications that could potentially benefit retailers beyond powering the customer experience across channels. Efficiencies could be realized in categories as wide-ranging as sales and marketing, supply chain and logistics, shelf analytics, pricing, in-store navigation, auto-checkout, staffing, product mix optimization and more.
For now, however, although digital convergence in retail has become table stakes, providing a good digital or omnichannel experience remains a differentiator.
Technologies such as bots may one day reinvent the customer experience, but it will take time for these technologies to assume their ultimate form in a way that can satisfy ever-climbing customer expectations.
This is why, according to the report, customer experience and management are projected to consume the majority of AI efforts between now and then. One of the greatest opportunities ahead, it argued, is the rising investment in speech analytics technology.
As for fringe AI experiences such as smart mirrors in store dressing rooms, even more finesse will be required. This is part of what many retailers find daunting, as implementing new technologies can come at high costs, with significant growing pains.
Furthermore, a lack of in-house knowledge and cultural readiness can hold back AI adoption. People tend to fear what they don’t understand. However, this is a case where what they don’t know can help, not hurt, them — it will only hurt if they ignore the industry changes and opportunities before them.