Juniper: Retailer AI spending set to explode
The need to personalize the customer experience is prompting retailers’ increasing investments in artificial intelligence.
AI spending will reach $7.3 billion per year by 2022 — up from an estimated $2 billion in 2018, according to “AI in Retail: Disruption, Analysis and Opportunities 2018-2022,” from Juniper Research.
When it comes to AI priorities, retailers are leveraging the technology for operations that range from automated marketing platforms that generate tailored, timely offers, to chatbots that provide instant customer service. However, spending will be strongest in customer service and sentiment analytics (54%), where AI can be applied to understand customer reaction to the products purchased and the service received.
This will be followed by AI-based automated marketing (30%) and demand forecasting (16%), the research revealed.
Meanwhile, AI-backed demand forecasting is increasingly becoming a key tool for retailers. With the advent of specific days for shopping, such as the Black Friday phenomena, understanding customer demand and correctly planning based on this is more important than ever, the study reported.
“Retailers are looking to replicate the success of Amazon in making AI a core part of their operations, with retailers increasingly turning to solutions such as AI-optimized pricing and discounting, as well as demand forecasting,” said Nick Maynard, research analyst, Juniper Research.
Regardless of where they begin, Juniper reported that retailers must invest in this area in order to stay competitive, particularly those companies that operate in low-margin retail segments. While AI costs are currently uneconomical for many players, the cost of AI tools will drop by 8% over the next four years, a factor that will help companies realize a 300% increase in software spend.
AI spending will reach $7.3 billion per year by 2022 — up from an estimated $2 billion in 2018, according to “AI in Retail: Disruption, Analysis and Opportunities 2018-2022,” from Juniper Research.
When it comes to AI priorities, retailers are leveraging the technology for operations that range from automated marketing platforms that generate tailored, timely offers, to chatbots that provide instant customer service. However, spending will be strongest in customer service and sentiment analytics (54%), where AI can be applied to understand customer reaction to the products purchased and the service received.
This will be followed by AI-based automated marketing (30%) and demand forecasting (16%), the research revealed.
Meanwhile, AI-backed demand forecasting is increasingly becoming a key tool for retailers. With the advent of specific days for shopping, such as the Black Friday phenomena, understanding customer demand and correctly planning based on this is more important than ever, the study reported.
“Retailers are looking to replicate the success of Amazon in making AI a core part of their operations, with retailers increasingly turning to solutions such as AI-optimized pricing and discounting, as well as demand forecasting,” said Nick Maynard, research analyst, Juniper Research.
Regardless of where they begin, Juniper reported that retailers must invest in this area in order to stay competitive, particularly those companies that operate in low-margin retail segments. While AI costs are currently uneconomical for many players, the cost of AI tools will drop by 8% over the next four years, a factor that will help companies realize a 300% increase in software spend.