Generative AI in Retail: Optimism, caution and preparation

Since ChatGPT’s public release on 30th November 2022, it has been impossible to avoid the conversation of how Generative AI (GenAI) is poised to disrupt the world we live in. Yet, whilst interest appears to be at an all-time high, GenAI’s implementation in the retail sector remains relatively low.

So where is GenAI going to truly shine in retail? What are some of the potential dangers? And how can retailers responsibly prepare for the adoption of GenAI?

Personal shopping assistants and post-sales care

One of the most promising use cases for GenAI in the retail sector is its role as a personal shopping assistant. Imagine an assistant that comprehends your culinary preferences, knows the ingredients you have at home, understands your current budget restrictions and suggests personalised meal plans, along with the items you need to purchase. This not only dramatically enhances customer experience but also provides retailers with a completely unique insight into how their customers behave, enabling them to tailor product offerings and marketing strategies in a much more specific manner.

The utility extends into the post-purchase experience as well with the ability to serve as a post-sales assistant, streamlining client interactions by automatically generating order tracking and status updates, helping with returns handling and providing product support. This increased post-purchase support and customer engagement boosts retention while optimising service costs and freeing up staff for higher business impact initiatives.

Hyper-personalised communication

GenAI holds the power to completely overhaul marketing strategies for retailers. Capitalising on historical loyalty information and utilising GenAI’s ability to analyse customer data and segment the audience based on predictive models allows retailers to generate personalised offers, tailor outreach content and frequency, and customise communications to create more engaging and relevant interactions with their customers.

Communications with clients can be automatically generated and personalised to predict which products clients are most likely to purchase whilst also factoring in real-time and regional factors such as geographic locations, cultural preferences and real-time weather forecasts. Once marketing strategies have been activated, GenAI is able to analyse the performance from the vast amounts of feedback data to identify trends and patterns that can then be automatically summarised and implemented.

Customer-aligned store layouts

Merchandising teams will find GenAI a highly valued tool: It can assist in designing store layouts that align with customer needs and missions. By identifying customer missions, GenAI can autonomously generate planograms that resonate with customers, optimising the merchandise mix and local store allocations. This capability enhances the overall shopping environment, making it more appealing and tailored to the preferences of the target audience.

Caution and preparation

Certain individuals have called for a pause in the development of GenAI with ethical concerns surrounding customer privacy when it comes to the vast amounts of input data necessary to power the technology whilst others are calling for more regulation surrounding the misuse of AI-generated content such as fake product reviews and misleading advertisements.

It is certain that there is a large amount of work to be done to ensure that retailers who choose to adopt GenAI do so in a responsible manner. Ensuring transparent use of customer data by establishing clear privacy policies that explicitly outline how customer data is being used whilst providing transparency on the AI algorithms that are being used can help retailers communicate honestly with their customers. Misuse of AI-generated content can be curtailed using sentiment analysis and content verification algorithms to help identify patterns indicative of fake reviews or misleading content.

To best prepare for the adoption of GenAI it is fundamental for businesses to clearly define business objectives that they hope the technology can achieve. Whether it is improving customer personalisation through marketing campaigns, implementing a personal shopping assistant or revamping store layouts, having specific objectives will help guide the implementation process.

GenAI requires a tremendous volume of high-quality data for it to be successfully implemented and provide meaningful outputs. Therefore, it is crucial for businesses to conduct an audit on the current technologies and develop a robust data infrastructure to help support the volume and complexity of data required to feed GenAI solutions.

Alongside the technological audit, it is also vital to assess employees’ technological abilities to ensure that the workforce has the skills necessary to work alongside the technologies. This may involve training data scientists, AI specialists and employees who will be interacting with the technology on a day-to-day basis.

Safeguard customer data privacy to ride the GenAI wave

GenAI brings tremendous potential to transform retail through enhanced customer service with the likes of personalised AI shopping assistants, hyper-personalised marketing campaigns that communicate effectively with customer bases, or assisting merchandising teams with automated and tailored store layouts.

Retailers that manage to identify and mitigate the potential harms of customer data privacy and misuse of AI-generated content whilst working on the foundations regarding data infrastructure, business case development and team up-skilling will find themselves prepared to ride the GenAI tidal wave that is currently landing. 

There is a wealth of opportunity afforded to Retailers that correctly embrace AI, and we can help you get started on the right foot.

Read our Retail resources to learn more, and when you're ready to fully leverage the power of AI, speak with us.