A new survey suggests retail executives have big expectations for artificial intelligence, but also serious reservations. Here are three steps that can help retailers deploy AI successfully.

Carol Juel, executive vice president and chief information officer, Synchrony.

Carol Juel, executive vice president and chief information officer, Synchrony

With more consumers demanding fast and personalized interactive shopping—both online and in physical stores—retailers are meeting the need with powerful new platforms that leverage artificial intelligence. Many retailers, especially large ones, are already using AI platforms to improve the customer experience, personalize marketing campaigns, and automate inventory and supply-chain logistics.

Even more are on the way. A majority of U.S. retailers (80 percent) believe that AI will change the digital customer experience, according to a newly released study of more than 320 U.S. retail executives conducted by Synchrony and Oxford Economics. Seventy-two percent of respondents believe it will be a competitive necessity for business within the next five years.

Executives say that within three years, the top benefits of AI will be more relevant, customized marketing campaigns and better merchandise selection.

Yet broad resistance to AI remains. According to the study, smaller retailers cite budget concerns and the lack of a clear business benefit as barriers to adoption—obstacles that are both made more complex by the varying applications for the technology. Meanwhile, executives at large retailers have their own hesitations—notably the lack of mature technology.

In short, retailers at both ends of the spectrum are worried about making major investments in the “wrong” AI.

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But the Synchrony-Oxford Economics study shows that despite these concerns, retailers are embracing AI. The majority of large retailers surveyed (78 percent) say AI is a competitive necessity for them today. An estimated 40 percent of large companies are already seeing AI deliver a competitive edge.

Nearly half of all retailers expect to use AI in the next three years for inventory planning, quality control, forecasting market trends using data analytics, and detecting fraud. And more than half (54 percent) of companies currently without AI acknowledge it will bring value—including improved customer insights, streamlined operations, enhanced security and more—within the next five years.

Given the expectations surrounding AI, how should retailers make their move? Our research reveals the following crucial steps.

Start with the right foundation

Artificial intelligence requires vast quantities and different types of data to be effective. Cloud technology is the building block for AI because it offers the most efficient way to handle the growing universe of data: Integrating and updating systems would be cumbersome if not impossible in a traditional computing environment. It is crucial, therefore, to invest in intelligent and flexible cloud platforms that support innovation and emerging technologies.

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The Synchrony-Oxford Economics study revealed that 80 percent of early retail adopters of key AI technologies already have mature cloud technology. They also tend to have robust mobile sales programs (friction-free transactions with customers, anytime and everywhere) and comprehensive systems for collecting and analyzing data.

Smaller retailers with fewer resources should look to partner with providers that offer sophisticated technology as a service.

Choose the right AI tech for your needs

Deploying AI requires careful planning. First, consider an important question: What problem are you trying to solve? The answer will help companies choose the AI tech that best fits their needs.

Artificial Intelligence is a broad concept that encompasses technologies as diverse as machine learning and analytics, chatbots, and robotic process automation (RPA). Understanding the differences is a critical step to successful adoption.

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For instance, a retailer prioritizing frictionless transactions needs different AI tools than the one focused on the customer’s in-store experience. Some retailers value AI for its ability to personalize marketing emails and predict purchasing; others seek more efficient back-office functions; and still others want chatbots for efficient customer service.

Today, business and technology strategy are intertwined. The business should always ensure that technology is aligned to company goals and objectives. Find your niche, then support it through the optimal AI technology.

Build on innovation

However they get started, retailers will soon need a full suite of AI tools. Executives say that within three years, the top benefits of AI will be more relevant, customized marketing campaigns and better merchandise selection. Right behind that comes internal operations, such as accounting, inventory control, and supply chain management: Roughly one-third to half of all companies expect that within three years, many such internal operations will be powered by AI.

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Meeting the constant demand for AI innovation will require systematic building on the fundamentals—and continuous but targeted innovation. Retailers should consistently evaluate their AI systems, with an eye to new features that align with the company’s goals. By iterating, you continually prioritize what is important to customers. What’s more important is that you ensure innovations are tied back to the core customer experience rather than being simply for innovation’s sake.

As AI continues to drive the future of retail, investing in technology to drive business results and innovation is critical to gain a competitive edge.

Synchrony is a consumer financial services company.

 

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