85% of A2000 retailers to invest in GenAI by 2027

85% of A2000 retailers will test/invest in GenAI to enhance product data, customer support, and customer experience initiatives through 2027, according to IDC.

The influence of Artificial Intelligence (AI) and Generative AI (GenAI) on the retail industry is becoming increasingly significant, reshaping how retailers engage with customers, manage operations, and optimize their supply chains. IDC unveils other AI-driven predictions set to redefine the retail landscape, offering unprecedented opportunities for personalization, efficiency, and growth:

• Contextualized Recommendations: By 2028, 50% of A2000 retailers will offer AI-enabled contextualized recommendations to enhance customer engagement, increasing real-time interactions by 40% and overall conversion rate by 15%.
• Contextual Ad Targeting: By 2027, over 50% of A500 retailers will use AI to provide contextual ad targeting to power next-gen retail media networks to monetize zero-party and first-party data business models.
• Computer Vision Enhancements: By 2027, 25% of A2000 retailers will use computer vision to make self-checkout 75% less riddled by shrink and BOPIS and curbside service 25% less time consuming

The recent IDC Global Retail Innovation survey 2023 identifies Generative AI-powered chatbots a top emerging technology for customer service in the region’s retail industry. The future of customer service in the region is likely to involve a hybrid approach: GenAI chatbots managing routine interactions and human associates addressing more complex needs. This integration of GenAI in retail not only promises enhanced customer experience, but also drives operational efficiency. Retailers in Asia/Pacific (excluding Japan) are poised for significant transformation propelled by AI innovation.

By leveraging GenAI’s capabilities, retailers in the Asia/Pacific region can create a more inclusive, culturally sensitive, and personalized customer experience, fostering stronger customer relationships and driving market growth. AI and GenAI are particularly pivotal in personalizing the journey for Asia’s “next billion” digital customers, guiding them through online shopping and aiding in product discovery.

In the evolving retail landscape, success hinges on a dynamic technological strategy. Beyond the significant impact of AI and GenAI, retailers in the Asia/Pacific region must embrace a holistic approach to stay competitive. Other predictions that business leaders should pay attention to as they navigate the changes ahead include:

• Decentralized Infrastructure: #2 By 2026, 50% of A2000 retailers will lean into decentralized infrastructure to put data at the edge to reduce costs and attain better security and control.
• Mobile and Wearable Inventory Management: By 2026, 70% of A2000 retailers will enable clienteling, inventory/fulfillment processes, queue busting, mobile POS, and employee self-service by deploying mobile devices, wearables, and BYOD programs.
• IoT for Perishables: By 2028, 40% of A2000 grocery supply chains will deploy intelligent IoT to track the condition of perishables, reducing food waste by 25% and inventories by 15% and improving quality by 30%.
• Multilevel Loyalty Strategies: By 2024, 30% of A2000 retailers will adopt a multilevel loyalty strategy, leveraging a unified view of the customer, to increase retention rate by 15% and Net Promoter Score by 20%.
• Increased Security Spending: By 2025, 40% of A2000 retailers will boost next-gen security technology spending by 25% or more to address key pain points including revenue loss from fraud/theft and more sophisticated cyberattacks.
• Product Experience Management: By 2028, 30% of A2000 retailers will move to product experience management SaaS platforms for consistency in product experience, boosting Customer Satisfaction Score by 15%

“Retailers in Asia/Pacific are steering towards a digital-first approach, with AI and GenAI at the helm of this transformation,” says Vijay Sarathi Gollapalli, Research Manager, IDC Retail Insights Asia/Pacific.

CT Bureau