Exclusive: How important is AI in retail?

A new survey reveals how retail decision-makers view and use artificial intelligence in their organizations.

According to results of a survey of 1,420 global IT decision-makers across industries including retail, released exclusively to Chain Store Age by Rackspace Technology, 71% of retail respondents said artificial intelligence/machine learning (AI/ML) leads their IT/business strategy.

One in four retail respondents said they began using AI/ML a year ago, while 18% said they started two years ago, 11% three years ago, 19% four years ago, and 9% five years ago. Roughly six in 10 (62%) are using AI/ML to predict business performance and for data analysis (61%), followed by 56% who are using it as a driver of innovation and 52% who are using it both to improve speed and efficiency and to reduce risk in the future (more than one response accepted). 

How much do retailers trust AI? 

Looking at trust in AI among retail respondents, the survey found:

• 35% said they slightly trust AI/ML results and 33% said they strongly trust them.
• Almost half (47%) said there are only slightly enough checks and balances in place to avoid the negative consequences of AI/ML, while 30% said there are strongly enough checks and balances in place. 
• 55% said they encountered pushback or scrutiny about the penetration of AI/ML in their organization. 

The benefits of AI revealed

So far, 41% of retail respondents said they have realized substantial benefits from AI/ML, with another 32% saying they’ve seen modest benefits and 23% who said it’s too early to tell.  Retailers listed those benefits as follows:

• 73% said faster time to profitability, increased productivity, increased revenue streams, operation cost reduction.
• 72% said improved customer satisfaction, risk management.
• 69% said increased innovation, personalized marketing.
• 66% said increased understanding of business/customers.
• 65% said reduced cost of new product development.
• 64% said the ability to hire/recruit new talent, increased sales.

Other findings

• Seven in 10 (71%) retail respondents cited a shortage of skilled talent as their greatest challenge in their AI/ML adoption so far, followed by 59% citing algorithm/model failure and 57% lack of technology infrastructure to support AI/ML.   
• More than eight in 10 (83%) retail respondents said they’ve grown their AI/ML workforce in the past 12 months, with 59% saying the implementation of AI/ML has resulted in a reduction of their workforce.

“As AI and machine learning mature and projects mature, we are seeing it expand out across the organization and become more ubiquitous, advancing in its importance, visibility, and usage,” said Jeff DeVerter, chief technology evangelist, Rackspace Technology. “The fact that more respondents began their AI/ML journey within the past year is striking, and points to the fact that these technologies are seen as they key to driving efficiencies in uncertain economic times. At the same time, the research makes clear that many organizations are still struggling to understand or realize the technologies’ full benefits of AI/ML, and many face internal resistance to adoption.”

[Read more: How does AI affect customer behavior?]

The survey was completed by Coleman Parkes Research in February 2023. Findings are based on the responses of 1,420 IT decision-makers across manufacturing/logistics, retail, hospitality/travel, energy, healthcare/pharma/biomedical, government, media/entertainment and financial service sectors in the Americas, Europe, Asia and the Middle East. Most companies/organizations polled have from 1,000 to 9,999 employees and an annual revenue between $50 million and $1 billion.