AI and ML in Retail: Help or Hype?
Top-performing retailers are bullish on artificial intelligence (AI) and machine learning (ML), with 71% of respondents to a Retail Systems Research report saying AI-enabled analytics will fundamentally change their merchandising forecasting by 2025.
The report defines top-performing retailers, or “winners,” as “those whose sales are already outperforming the norm.” Key reasons these retailers are considering AI and ML include the technologies’ potential to guide decision-making processes, including supply chain planning and management, and store performance evaluation methods.
“There is a veritable ocean of external data available from an increasingly digitized global marketplace, and the hope is that AI/ML technology can be used to turn that data into insights, and help retailers better understand the environments they operate in,” according to the report.
Many retailers seek game-changing technology to improve business analytics, which bolsters their ability to respond to marketplace change. But the signals are mixed for retailers’ expectations for AI and ML. The report shows that retailers expect AI and ML to provide much-needed analytics for supply chain planning and management within three years; however, they don’t expect this process to come easy.
Although more than half of all “winners” say they agree that AI-enabled analytics will significantly impact demand forecasting, supply chain planning, and customer interactions, just more than half (52%) say their company has a good idea of how AI-enabled technologies would impact operations over the next three years, while 37% describe AI’s value as “overblown.” Change management seems to drive this cautious optimism.
Interestingly, retailers not labeled as “winners” are more optimistic, with 71% saying they know how AI would affect operations and just 15% not buying into the hype.