The retail industry is in the midst of a major technological transformation, fueled by the rise of AI.
With the highest potential for AI and analytics among all industries, the retail and consumer packaged goods (CPG) sectors are poised to harness the power of AI to increase operational efficiency, elevate customer and employee experiences, and promote growth. As such, it is essential to stay ahead of the curve by anticipating potential trends that aim to change the retail game.
NVIDIA’s first annual State of AI in Retail & CPG survey—conducted among industry professionals—provides insights into the state of AI adoption in retail, its impact on revenue and costs, and emerging trends that shape the future of the industry.
With more than 400 respondents worldwide, including C-suite and other executives, general managers and individual contributors, the survey consisted of questions covering a range of AI topics, top use cases, top challenges large infrastructure investment initiatives and deployment models.
Improving operational efficiency is a top priority
To stay ahead in a highly dynamic market, retailers are actively considering how AI can help them meet evolving customer preferences, address labor shortages and drive sustainability efforts. AI has already proven to be a game changer for retailers, with 69% reporting an increase in annual revenue attributable to AI adoption. Additionally, 72% of retailers using AI experienced a reduction in operating costs.
AI is increasing operational efficiency, elevating customer experiences and driving growth. The top five current AI use cases were as follows:
- Store analytics and insights
- Personalized customer recommendations
- Adaptive advertising, promotions and prizes
- Stock and inventory management
- Conversational AI
While retailers are actively implementing AI, there are still areas they plan to explore. These include further investment in AI infrastructure to overcome challenges related to insufficient technology and AI talent shortages, exploring the metaverse’s potential for customer engagement and operational efficiency, while also leveraging AI for brick-and-mortar stores to provided convenience and personalized customer experiences. , transforming customer experiences using generative AI and ensuring privacy and data protection in generative AI adoption.
Generative AI is changing customer experiences
Generative AI featured prominently in some of the key AI use cases for retail. Use cases ranged from multimodal shopping advisors to personalized product recommendations; adaptive advertising, promotions and prizes; product labeling and cataloging; identification of similar and complementary products; as well as deploying brand avatars for automated customer service.
Retailers recognized the transformative potential of generative AI, with 86% expressing a desire to use it to improve customer experiences. Respondents acknowledged that incorporating AI into business practices and solutions can revolutionize customer engagement, optimize marketing strategies and streamline operational processes.
Staying ahead with a comprehensive approach
To stay competitive, the survey showed the importance of an omnichannel approach that integrates multiple online and offline channels to provide consumers with a consistent experience.
The results showed that e-commerce was the most used channel, with 79% of retailers actively participating. Mobile apps also gained traction, with over half of retailers using them to bridge the gap between digital and physical shopping experiences.
Despite the rise of digital shopping, 30% of respondents say physical stores have the greatest opportunity for revenue growth (ranked second only to e-commerce) and remain the channel with the most AI use cases for retailers. Given the emphasis on smart stores and their central role in the omnichannel experience, use cases like store analytics and loss prevention will continue to be critical investments.
Investing in AI Infrastructure
While AI adoption is still in its early stages, retailers are committed to increasing their investment in AI infrastructure. Over 60% of respondents plan to increase their AI investments in the next 18 months. This commitment reflects the industry’s recognition of technology’s potential to increase operational efficiency, reduce costs, elevate customer experiences and drive growth.
Download the State of AI in Retail and CPG: 2024 Trends report for results and in-depth insights.
Explore NVIDIA’s AI solutions and enterprise-grade AI platforms for retail at www.nvidia.com/retail.