How generative AI is reshaping retail

Today, there is a strong global interest in generative artificial intelligence. And for good reason. Generative AI is already creating countless new opportunities for retailers and consumer brands. It represents a leap in capabilities because it is both extremely powerful and extremely flexible. This adaptability will help leaders redefine the way they run their businesses, serve their customers, and get their jobs done.

Until recently, aside from advanced AI models, large-scale language models or generative AI were barely known. At the end of 2022, OpenAI released ChatCPG. Months later, companies like Google, Microsoft, and Meta launched their own giant language models.

For retailers, generative AI brings endless opportunities. For retailers and brands, the question is not whether they should embed AI into their digital core, but how and when.

By embedding it into the digital core of enterprises, generative AI will transform them to optimize tasks, manage data, create faster insights, innovate with new experiences, empower frontline employees, and connect and communicate with customers Ability.

Here are some opportunities retailers can take action on.

New ways to interact with customers

Every role in every retailer has the potential to be reinvented, with people working alongside “AI co-pilots” becoming the norm.

For example, we’ve seen ways in which ChatGPT can effectively conduct conversations, answer questions, and summarize information in a natural, engaging, and relevant way. The technology can extend generative AI into retail customer support to help answer queries, product explanations and recommendations.

We can also expect people to perform new missions, such as ensuring the accurate and responsible use of artificial intelligence systems. Businesses that invest in training people to work with generative AI will have significant advantages.

We’re already seeing early examples of retailers driving this type of AI-powered digital experience. Many department stores are using artificial intelligence shopping assistants to enhance the customer experience by asking shoppers to answer questions about product availability and location.

Brands such as Starbucks have been applying artificial intelligence algorithms to provide customers with personalized product recommendations. Generative AI will take the technology to a whole new level with its ability to process large amounts of data and provide insights in real time.

Integrating customers’ disparate perspectives in a coherent way is a challenge for retailers, and the issue will become even more pressing. Generative AI will be key to realizing the long-talked about but yet unfulfilled vision of delivering highly relevant retail recommendations to every customer at any moment.

A New Way to Run a Business

Generative AI is ideal for tasks like demand forecasting and inventory management because the technology excels at summarizing insights from a variety of unstructured data sources.

By using sources such as historical sales data, market trends, weather conditions and social media sentiment, retailers will be able to more accurately understand upcoming demand. This will help reduce stockouts, reduce excess inventory, and improve operational efficiency.

There is also great potential in areas such as product design. Through AI fine-tuning of existing designs and other data sources, retailers will be able to instantly generate designs that are relevant and popular for their brand. The technology also provides an opportunity to allow customers to customize their own products on demand.

Augmented Stores

Generative AI promises to radically enhance retailers’ ability to blend physical and digital experiences in their stores.

Take product promotion as an example. By analyzing product attributes, historical sales, and customer preferences, generative AI will be able to suggest optimized store layouts and product placement, and provide shoppers with an enhanced, personalized wayfinding experience.

Imagine, for example, being guided through a local store using an AI-based generative app that proactively recommends products related to unique preferences and needs.

Responsible Artificial Intelligence

We are just scratching the surface of the true impact of generative AI on retail. But the technology is advancing at an astonishing pace. That’s why it’s crucial to ensure responsible use of artificial intelligence. This means setting guardrails around acquiring, refining, and deploying data. It also means thinking through cybersecurity operations. In addition to managing regulatory and privacy risks, retailers can take further steps to ensure that the technology they use is responsible by design.

In the near future, any retailer that wants to keep pace with its peers will have to have strong AI-generated capabilities. Those retailers that become deeply invested in this exciting new technology and begin to explore how it can be applied to every aspect of their business will be successful.

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