- Retail investments in AI are expected to soar to US$31 billion by 2028
- Gen AI could potentially elevate the retail sector’s profitability by 20% by 2025
- 80% of organizations express low-to-moderate readiness
New Delhi, 18 Jan 2024 — The retail industry, known for being adaptable, is on the brink of a transformative era with the advent of Generation AI (Gen AI), according to a recent survey conducted by EY. Traditionally, the industry has relied on data to predict consumer behaviour and handle inventories. Now, it’s ready to use Gen AI to gain new insights and enhance efficiency throughout the entire retail value chain. 6% of surveyed audience have already implemented Gen AI, a staggering 71% in the retail sector plan to adopt it within the next 12 months, underscoring its perceived value.
Gen AI, the next frontier in artificial intelligence, promises to revolutionize the retail experience by tapping into vast repositories of unstructured data. Current retail investments in AI, pegged at US$5 billion, are expected to soar to US$31 billion by 2028. 88% of respondents in the retail sector believe Gen AI will have medium to high impact on their retail business. As one could anticipate, 76% foresee customer experience to have the highest impact, but it is noteworthy that the industry is exploring its impact on product innovation (65%), cost reduction (54%), and the entire value chain (50%).
According to the EY report, by 2025, Gen AI could potentially elevate the retail sector’s profitability by 20%. The technology does not just reduce overheads but can significantly increase sales through tailored consumer experiences. Even local retailers can provide ‘hyper-local’ personalized shopping experiences by integrating Gen AI tools. This along with its IT prowess, India could emerge as a global nucleus for Gen AI retail solutions.
Sharing industry insights, Angshuman Bhattacharya, National Leader – Consumer Product and Retail Sector, EY India said, “Gen AI is not just a technological leap; it’s a seismic shift in how retailers adapt, innovate, and enhance customer experiences. With 71% gearing up for adoption, it’s clear that the retail landscape is on the brink of a transformative era. But as we ride this wave, privacy, ethics, and readiness take center stage. Board, CEO and CIO leadership must navigate this AI revolution, balancing innovation with responsibility to craft a future where technology not only drives profits but also enriches our shopping experiences with integrity and transparency.”
Challenges and dilemmas: Privacy and ethics
As Gen AI promises valuable insights for retailers, the industry faces ethical considerations and challenges. Privacy concerns arise with location tracking for real-time promotions, necessitating transparency in data usage. The survey indicates that 80% of organizations express low-to-moderate readiness, citing unclear use cases and a skills gap. Currently, 82% prefer partnerships with external tech providers for Gen AI implementation.
Link to the detailed report – https://www.ey.com/en_in/ai/generative-ai-india-report/industries-in-transformation/retail
– End –
EY exists to build a better working world, helping create long-term value for clients, people and society and build trust in the capital markets. Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate. Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws.
For more information about our organization, please visit ey.com