Retailers will start spending on AI (artificial intelligence) — reaching $7.3 billion per annum by 2022 from $2 billion in 2018 – as AI cost will dip 8 percent and returns will surge 300 percent.
Juniper Research said retailers are making investment in AI in order to target new avenues to increase personalisation of the customer experience.
Retailers will invest in AI tools that allow them to differentiate and improve the services they offer customers. These range from automated marketing platforms that generate tailored, timely offers, to chatbots that provide instant customer service.
AI related spending will be strongest in customer service and sentiment analytics, where AI can be applied to understand customer reaction to the products purchased and the service received. This will prove to be a key tool for retailers seeking to improve their customer experience.
Retailer’s AI spending in 2022
Customer Service & Sentiment Analytics — 54%
AI-based Automated Marketing – 30%
Demand Forecasting — 16%
Retailers will use AI insights to design and target new product ranges, as well as to create promotional offers.
“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-optimised pricing and discounting, as well as demand forecasting,” Research author Nick Maynard said.
AI-backed demand forecasting is increasingly becoming a key tool for retailers globally. 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.
Retailers must invest in this area in order to stay competitive, particularly in low-margin retail segments. The cost of AI tools, currently uneconomical for many players, will drop by 8 percent over the next 4 years, helping realise a 300 percent increase in software spend.
