Why retailers need to scale AI investments

Gen AI significantly boosts productivity and cuts industry-wide costs.

Retailers must scale their initial AI investments to keep up with consumers rapidly adopting AI, according to Bain & Company. 

The report said that generative AI can significantly boost productivity and reduce costs across the industry.

“From conversational search to personalised apps, gen AI is reshaping the retail landscape in a way that is going to be even faster and more transformative than the smart phone or the internet,” said Mikey Vu, partner in Bain & Company’s Retail practice. 

“A year into their journey, retailers have enjoyed some early successes. It will be critical for them to scale these use cases, with a focus on ROI, to keep pace with the evolving expectations of shoppers who are rapidly incorporating generative AI into their daily lives.”

The report pointed out that AI-powered tools can personalise customer experiences such as through conversational shopping assistants and enhanced search functionalities, potentially increasing revenue by 5 to 10%. Additionally, consumers trust AI for personalised shopping recommendations more than any other use case. 

Retailers already using AI to streamline marketing have also seen promising results. Integrating AI into broader marketing strategies, like content translation and social media, could boost marketing productivity by 30 to 40%.

Moreover, the report estimated that AI can boost productivity by up to 25% for frontline workers, warehouse staff, and corporate employees through automated inventory checks, restocking alerts, and real-time problem-solving assistants.

To fully capitalise on AI, it also advised focusing on three areas, namely change management, democratisation, and talent development. 

Bain also urged retailers to redesign jobs, ensure AI tools are accessible to all employees, and continuously upskill workers.