In the age of e-commerce, retailers are facing serious challenges to stay competitive, including high employee turnover rates, massive amounts of customer data, and the need to meet rising consumer expectations. Artificial intelligence (AI) is seen as a key solution to overcoming those challenges, but retailers also see significant barriers to widespread adoption, a new report by KPMG found.
According to findings from KPMG’s Living in an AI World 2020: Achievements and Challenges of Artificial Intelligence Across Five Industries report, 85 percent of retail insiders believe AI has the potential to significantly improve organizational efficiencies for their company. However, much more needs to be done before retailers fully capitalize on the power of this transformative technology. Just half (51 percent) of retail insiders believe the industry is ahead of the curve when it comes to AI adoption, and a similar number, 52 percent, say AI adoption is at least moderately functional in their organization.
How specifically will AI be adopted by retailers to help transform their businesses in the next two years? Fifty-six percent of respondents said that customer intelligence will have the biggest impact, followed by self-checkout services (55 percent), chatbots for customer service (45 percent), supply chain planning (44 percent), and marketing/advertising (43 percent).
However, more work is required before widespread adoption of AI in retail will happen. Respondents pointed to a number of hurdles that must be overcome to fully realize AI’s advantages. For one, the workforce itself is a key problem. Just 43 percent of respondents believe their employees are prepared for AI adoption, perhaps because just 52 percent say their companies offer any type of AI training. This gap in employee acceptance and skill levels may explain why respondents believe only 26 percent of retail employees are supportive of AI adoption overall, the lowest percentage of all industries that were surveyed.
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The C-suite is wary, too. Not only do 62 percent of retail insiders believe their workforce is worried about AI taking away jobs (the highest of any industry), 54 percent are also worried that their own jobs could be replaced by AI some day. Nevertheless, they know that talent with AI-specific skills is a necessity for retailers to reap the technology’s rewards and stay competitive.
Retailers are also cognizant of other challenges that may be slowing AI adoption, such as perceived threats involving consumer data security and privacy, which was identified by 70 percent of respondents.
However, retailers are aggressively striving to overcome AI adoption challenges because they know its benefits can be business altering. Every retail CEO is asking, “What’s our strategy against Amazon?” And there’s no good way to answer that question unless the organization is rapidly approaching world-class in terms of AI usage.
Despite challenges to adoption, retailers are pushing forward with AI-driven initiatives because the technology has the power to transform the industry and address some of its most pressing competitive threats. Thus, insiders agree that AI is definitely the way of the future. And those that are nimble enough to adopt it sooner rather than later will be best equipped to meet the competitive challenges facing the industry.
Bill Nowacki is managing director of decision science at KPMG, a global network of professional firms providing audit, tax and advisory services.
Source: Total Retail