77% of Retailers Rank Generative AI as the Most Impactful Emerging Technology

Generative AI stands to revolutionize retail, offering substantial benefits but also leading to increasingly sophisticated AI-generated attacks and scrutiny.

Generative AI stands to revolutionize retail, offering substantial benefits but also leading to increasingly sophisticated AI-generated attacks and scrutiny.

The rise of large language models (LLMs) such as ChatGPT has thrust generative artificial intelligence (AI) into the driver’s seat of retail technologies, prompting brands across industry subsegments to reassess their strategies. This development follows retailers’ yearslong efforts to leverage AI’s earlier iterations to support novel customer experience initiatives. However, the latest applications of the technology come with some significant caveats.1,265%: Increase in phishing attacks between Q4 2022 and Q3 2023

Generative AI can foster fraud, for example, not infrequently in the form of customer impersonations or fake websites. This highlights the need for greater consumer and retailer vigilance in the age of AI. Likewise, regulators should refine responses to its application to advance the retail technology stack in tandem with consumer protections.

The “Generative AI Tracker®” examines how integrating generative AI into the retail technology stack for most businesses represents a complex set of challenges, including the competition within the industry due to the shortage of skilled developer talent.

Embedding Generative AI Across the Retail Technology Stack

Retailers leverage generative AI to help rework operations, from customer service to inventory management. These companies, ranging from incumbents to startups, effectively deploy AI, improving personalized shopping experiences and optimizing supply chains. As they embrace these technologies, they attract significant investments and form strategic partnerships.

Integrating generative AI into the retail technology stack is about much more than automation — it’s about reshaping the consumer experience. For example, Barcelona-based Style DNA leverages AI via its “pocket stylist” tool to help users discover colors, patterns and fabrics that best suit them. Meanwhile, London-based Ometria employs AI for customer data analysis to deliver highly targeted marketing campaigns.42%: Share of organizations citing insufficient talent and training as the biggest barrier to leveraging AI

To learn more, visit the Tracker’s Companies of Note section.

Unpacking Generative AI’s Promise in Retail

Generative AI, as used by companies like Coveo and Yext, is transforming retail by providing individualized and connected digital experiences. These AI platforms enable semantic search and provide personalized recommendations to enhance the consumer shopping experience.

AI’s application in analyzing customer data and creating personalized recommendations is gaining traction. Two in three retailers see the technology as pivotal for trend analysis in inventory management, while 40% envision its role in establishing competitive pricing.

To learn more, visit the Tracker’s Innovation and Use Cases section.

Exploring the Ethical Implications of Generative AI in Retail

92%: Portion of companies using AI-driven personalization to drive growthGenerative AI significantly enhances customer engagement in retail by personalizing experiences. As a result, retailers now harness AI to tailor product recommendations and marketing campaigns, aligning closely with individual consumer preferences. However, this raises critical concerns about consumer privacy and the ethical use of customer data, challenging retailers to balance personalization with privacy protection.

A recent report highlights that 92% of businesses have started using the technology for personalization purposes, leading to a 7% year-over-year increase in repeat buyers. However, it also finds that only 51% of consumers trust brands with their data. This disconnect underscores the need for transparency in how retailers, among others, use AI to personalize experiences for their customers.

To learn more, visit the Tracker’s Issues and Challenges section.

About the Tracker

The “Generative AI Tracker®,” a collaboration with AI-ID, examines generative AI’s applications for the retail industry, its potential benefits and the challenges and controversies impeding adoption across consumer-facing businesses.