About 96% of business and IT decision-makers in the retail sector agree that AI will have a notable impact on delivering a better digital experience for end users, revealed a new survey by Riverbed, a leader in ‘AI observability’.

Announcing retail sector results of the ‘Riverbed Global AI & Digital Experience Survey’, Riverbed said 95% of those surveyed at retail organisations say AI is a top C-Suite priority and 84% agree it provides a competitive advantage.

In a fast-paced industry where customer service is a priority, the opportunity to use AI to personalise products and services, revolutionise delivery channels, and effectively manage peaks in demand such as White Friday and Cyber Monday are vast.

By leveraging AI to streamline demand forecasting, optimize inventory, personalise customer interactions, and adjust pricing, retailers can have a better handle on these stress points, and deliver a seamless digital experience.

Despite this enthusiasm and the benefits of AI, only 40% of retailers are fully prepared to implement AI projects now, as organisations address challenges ranging from data quality to scalability that are impacting their ability to realize the full benefits of AI.

However, rapid expansion is anticipated during the next three years, which is crucial as retailers seek to implement practical AI approaches and solutions that improve the shopping experience.

By 2027, 93% of retail leaders expect their organisation to be fully prepared to implement their AI strategy and initiatives. This is higher than the overall industry average, in which 86% expect to be fully prepared within three years.

Currently, 54% of business and IT decision makers in retail say the primary reason for using AI is to drive operational efficiencies versus growth (46%).

However, during the next three years, when AI is anticipated to mature, those numbers flip, with 56% of organisations saying AI will primarily be a growth driver versus driving efficiencies (44%).

Gen Z and Millennials in Retail Demonstrating AI Expertise

With AI set to transform retail organisations worldwide, the survey found enthusiasm for AI is high among the C-Suite, younger generation employees and organisations as a whole.

Today, 71% of retail leaders say AI is a key strategic priority for their organisation, and another 29% say it’s at least moderately important.

There is strong enthusiasm for AI adoption in retail organisations. 64% say AI sentiment in their organisation is positive, 33% neutral and only 3% sceptical.

Across all sectors, Gen Z are perceived as the standard-bearers for AI, but business and IT decision-makers in the retail sector perceive Millennials as equally comfortable with the technology. When asked which generation is most comfortable with AI in the workplace, retail leaders said Gen Z (47%) and Millennials (46%), followed by Gen X (6%) and Baby Boomers (1%).

The research also found that most retail organisations have moved past the stages of assessing and experimenting with AI.

Today, 65% are accelerating their AI strategies with growing investment in infrastructure and talent; and another 25% are in the final transformative stage where AI is fully integrated into their business processes.

Digital User Experience a Priority for Retail

Riverbed’s previous Global Digital Employee Experience (DEX) survey from 2023 found that DEX is a critical focus for organisations, especially with heightened digital expectations of Gen Z and Millennial employees, accounting for about half of the global workforce.

In this year’s survey, enterprises recognized the role AI plays in DEX, as an overwhelming majority of retail organisations, 91%, state that AI automation is important to deliver an improved digital experience for end users.

Over half (53%) of retail organisations are achieving improved DEX through 24/7 support (such as chatbots and virtual assistants). By streamlining communications, these tools improve efficiency across organisations, including customer service.

Survey respondents reported the main ways they expect to use AI within IT to improve DEX within three years’ time included: automated remediation (76%), 24/7 support availability such as chatbots (71%), workflow automation (68%), data-driven insight (64%) and feedback analysis (61%).

Despite AI Benefits, Gaps Exist in Retail Sector

Despite widespread AI enthusiasm, the research identified three major gaps that organisations must overcome to ensure their AI adoption results in benefits and enterprise success.

Like other sectors, retailers must overcome these gaps in order to achieve successful AI adoption.

Reality Gap: Retail organisations are especially confident about their AI implementation for IT services and digital experience, with 84% claiming to be ahead of their peers, including 35% who say they are significantly ahead.

Only 4% say they are slightly behind. This gap between perception and reality indicates many leaders are overconfident about where their IT function is on their AI journey relative to their industry peers.

Readiness Gap: As stated earlier, there’s a readiness gap as only 40% of retail leaders say their organization is fully prepared to implement AI projects now. Additionally, 77% say with AI still maturing, it’s challenging to implement AI that works and scales.

Data Gap: Nearly all retail leaders (87%) acknowledge that great data is critical for great AI. However, of those surveyed, 72% are concerned about the effectiveness of their organisation’s data for AI usage, and only 45% rated their data as excellent for accuracy, with 42% saying their data quality is a barrier to further AI investment.             

There are also growing concerns in the sector about data confidentiality and security risks, with 91% concerned that AI will access their organization’s proprietary data in the public domain due to their organisation using AI.

As the retail sector handles increasingly sensitive consumer data, it’s critical for organisations to adhere to stringent data protection regulations, and minimise risks associated with the leakage of customer information.

“As retailers prepare for seasonal flash sales such as Black Friday and Cyber Monday, the adoption of AI technology is revolutionising the retail sector, offering personalised recommendations and superior shopping experiences,” explains Jim Gargan, CMO, at Riverbed.

“However, leveraging AI to analyse consumer buying behaviour and trends requires access to great data and our recent study reveals that only 45% of business and IT leaders in retail organisations rate their data as excellent for accuracy.

“At Riverbed, we’re helping our retail customers close this data gap through a practical AI approach, with an AI-powered platform that offers comprehensive data and visibility across the entire IT environment.

“As a result, this enhances the employee experience and productivity, which in turn delivers superior customer experiences, ultimately increasing loyalty and sales for retailers.”

Driving Successful AI Initiatives in Retail

Enterprises are taking several steps to overcome challenges and drive successful AI strategies that deliver tangible results.

To address AI preparedness, 55% of retail sector organisations have formed dedicated AI teams, and 50% observability and/or user experience teams.

For this sector, investment in AI talent is becoming a priority, as retailers recruit data scientists, AI specialists, and engineers to maintain a competitive edge in a rapidly evolving landscape.

Retailers are exploring other initiatives to drive successful AI integration. When it comes to data, the vast majority of retail leaders (88%) say using real data, rather than synthetic data, is crucial in AI efforts to improve the digital experience.

Additionally, 86% of respondents agree that observability across all elements of IT is important in an AIOps strategy, and observability to overcome network blind spots – including public cloud (86%), enterprise-owned mobile devices (85%), Zero Trust architectures (83%), and remote work environments (82%) – is either extremely or moderately important. – TradeArabia News Service