This chart shows AI use by retail organizations worldwide in 2018, by operating model. When it comes to artificial intelligence, machine learning is retailers go-to AI use across all business types, according to Capgemini. Artificial intelligence is an umbrella term, encompassing a wide variety of automated technologies. Machine learning refers to the process of building a system where a user can feed it new information and it can process that information based on previous data the machine has received, making decisions and taking actions without being explicitly programmed to do so. The study also found that retailers are primarily using AI for consumer-facing projects.
A recent study by the Capgemini Research Institute examines the multi-billion dollar opportunity that artificial intelligence (AI) offers for retail. AI deployments among large retailers have increased exponentially in recent years, but many use cases have yet to be tapped. With feedback from over 400 retailers, analysis of more than 40 real-world use cases, and secondary research of the top 250 retailers' current state of AI deployment, the report not only investigates the status quo, but also offers a practical framework of use cases for companies that are just starting their AI journey. Input from retailers lends some much-needed realism to the discussion about AI deployments. Retailers are slowly realizing that AI and machine learning (ML) are not silver bullets.
The retail industry is undergoing a sea change so massive that many industry insiders have termed it the "retail apocalypse." In a sign of this industry upheaval, in 2018 major retailers closed 5,524 stores in the U.S. and 1,432 stores in the U.K., according to figures compiled by the Coresight Research, a firm that studies the retail industry.1 In some good news for the industry, Coresight predicts that 2019 "will not be the year of retail apocalypse or even decline. Instead, it will be a year of reinvention -- for the retail sector as a whole and for physical stores in particular."2 This predicted reinvention of the industry stems in part from the use of sophisticated technology, specifically artificial intelligence.
The ScaleFactor State of SMB Finance report says only 10% of retail businesses are using Artificial Intelligence (AI). The report reveals Small and Medium Business (SMB) retailers are the most reluctant to implement AI or machine learning (ML) solutions into their workflow. Furthermore, 40% say they are not interested in this technology. Despite the disinterest, 44% of retail businesses say they do not find the process of implementing AI or ML challenging; the highest across all industries. And over a third (39%) admit to not knowing AI/machine learning were options for their accounting solutions.
Implementing AI solutions in brick-and-mortar retail is naturally more challenging than online retail, yet taking a step back, both are still surprisingly only in early stages. According to a 2018 study by Capgemini, over a quarter of the top 250 global retailers are integrating AI into their organizations (a sharp increase from 2016, when it was only a small minority of 4 percent). However, the study also found that only 1 percent of AI initiatives reach full-scale deployment. This is about to change. According to McKinsey Global Institute, investments by retail and CPG in artificial intelligence are expected to exceed $8 billion by 2024.