Consumers may hold inflated expectations regarding the level of artificial intelligence (AI) integration in retail businesses.
In a recent study titled 'Transformation Meets Innovation: Smart Retail and AI in Retail,' conducted by IFH Föderer, it was revealed that a significant majority of consumers expect AI to be used in various aspects of retail. The survey, which polled 1000 consumers and 100 retailers, found that 65 percent of consumers anticipate AI in marketing and advertising, 62 percent in consultation and customer service, and 60 percent in fraud detection and security.
However, transparency is key when it comes to the use of AI in retail. Over two-thirds of consumers expressed a desire for open communication about AI applications across all areas. While AI is extensively used in inventory management and logistics (53 percent), acceptance of AI varies depending on the field of application. Many consumers welcome AI where it improves processes or the customer experience, but there is greater skepticism regarding live chats or personally related processes, with many preferring human contact in these areas.
The study also found that retailers usually only communicate their AI use selectively, focusing on AI applications with visible customer benefit. Thomas Scholdra, co-author of the study, emphasizes the immense opportunities AI presents for retail, including more efficient processes and personalized shopping experiences. However, many retailers do not view the use of AI as a strategically relevant component of their business models, leading to cautious investment and implementation despite consumer expectations.
The economic crisis has also had an impact, with 42 percent of consumers surveyed having postponed planned spending, and half of the 1000 consumers surveyed in Germany feeling strongly insecure. These economic concerns have led to a more cautious approach to AI adoption, with many German retailers not expecting disruptive changes from AI in the long term.
Transparency is crucial, especially for tech-savvy, younger target groups. Retailers are currently testing or preparing first steps in other areas, and consumers are eager to know how AI is used in internal processes such as process optimization, personnel, or logistics, as well as in the direct customer experience.
Werner Reinartz of University of Cologne, Director of IFH Föderer, and co-author of the study, agrees that retailers are making cautious investments and implementations of AI. There is majority approval for AI in recommendations or bonus programs, but retailers must navigate these waters carefully to ensure consumer trust and satisfaction. As AI continues to evolve and become more integrated into our daily lives, it will be interesting to see how retailers adapt and respond to consumer expectations.
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