Kathy Kimple, executive director of strategy at OSF Digital, explains how AI is shaping the retail industry in various ways including hyper-personalization of customer experiences, automating tasks to maximize profitability, and increasing employee satisfaction.
| by Judy Mottl — Editor, RetailCustomerExperience.com & RewardsThatMatter.com
Artificial intelligence, and most recently, generative AI, is the most talked about technology to hit the retail landscape in decades and there is no sign of its lightning rod role diminishing any time soon.
The technology is on track to hit $52.45 billion by 2030 with an annual growth rate of 29.6% from 2022 to 2030, according to a report by The Insight Partners. The growth is being driven by a rise in consumer data generation through digitalization and increasing preference toward personalized shopping.
In the retail realm, nine out of 10 organizations are adopting or piloting generative AI systems, according to a MIT Technology Review Insight report. Real-time data analysis and insights are the highest-value generative AI use cases for personalization and customer experience, according to a press release on the report's findings.
So, it's not a huge surprise that 92% of U.S. retailers plan to increase AI investment this year, compared to 100% in India and China, according to a Lucidworks' generative AI benchmark study. The most common expected impact of generative AI in retail will be in business opportunities improvement, followed by automation, efficiency gains and customer experience improvement.
To get a closer look at where AI stands today in retail, and where it may stand a few years down the road, RetailCustomerExperience reached out to Kathy Kimple, executive director of strategy at OSF Digital, via an email interview.
Kimple has more than 25 years in omnichannel retail, focusing on brands, covering digital strategy and store operations, registry, marketing, tech selection, and organizational design.
OSF Digital is a global commerce and digital cloud technology solution company, with expertise in enterprise CRM, CMS, OMS, connected commerce, e-commerce management, and cloud application development. It provides consulting to retailers, brands, and B2B organizations on growing their business through services such as omnichannel acceleration strategy and roadmap, digital marketing optimization, loyalty strategy and program design, CX and benchmarking, organizational design and change management.
Q. So, at this point, where does AI stand within the retail industry in terms of being embraced/deployed/wanted?
A. There has been a quick adoption of AI in retail. Right now, AI is shaping the retail industry in various ways including hyper-personalization of customer experiences, automating tasks to maximize profitability, and increasing employee satisfaction. Site search and recommendations is another area where AI is starting to have a huge impact.
Search continues to be a priority among retailers in the Omnichannel Retail Index. We know customers who use search convert much higher since they're showing intent. While many of the best-practices criteria in search have high adoption (such as auto-suggest search terms), there are still opportunities to add features to offer great CX. One is remembering their past search terms, which only 38% of retailers in the OSF Omnichannel Index do. A newish site search tactic that is gaining popularity is pre-populating autosuggest with top searches or trending items. Adopted by 43% in 2023, this is a great use of AI.
Q. What do you predict this year will bring for AI in retail?
A. We think that retailers will prioritize AI, especially in service. Retailers will use AI to improve customer experience and customer service. According to recent research from Salesforce, 32% of retailers said generating personalized responses for agents to send to customers is their number one use case for AI.
Many retailers and brands have been using some type of AI in chatbots and virtual assistants by pre-populating answers or outcomes to set number of questions. AI has proven to be useful in streamlining tasks and enhancing efficiency in handling common requests. The generative AI algorithms analyze customer feedback and queries, allowing the chatbot to improve its understanding and offer increasingly accurate and relevant recommendations over time. So, it's personalized, engaging and conversational, efficient, and continually improving.
Q. What AI approach/tech/strategy will prove most valuable to retailers this year?
A. The most valuable AI approach for retailers is to focus on data, data, data. It is about how retailers develop a customer-centricity model, really looking at the customer 360 view. This requires a team, it requires change, and it also requires change management.
Q. What should retailers be doing to prepare to pull in AI into their tool kits this year?
A. Retailers should start by unifying and cleaning up their data and preparing their channels for generative AI. This is the foundational element of 'fitting' or using AI for a specific business outcome or use case.
Judy Mottl is editor of Retail Customer Experience and Rewards That Matter. She has decades of experience as a reporter, writer and editor covering technology and business for top media including AOL, InformationWeek, InternetNews and Food Truck Operator.
