Retailers and AI automation: the challenges of adoption
10 Oct 2023
5.5 min read
When talking about digital transformation in retail, if you don’t hear the words “automation” and “AI”, you’re not listening. And with the global retail automation market set to reach almost £17 billion by 2026 at a CAGR of 9.7% between 2021 and 2026 (MeiliRobots), it’s one of the most essential and prevalent solutions used by retail business owners today, allowing retailers to provide 24/7 service, drive efficiency, maximise productivity, and increase profits.
However, while we see article after article about the benefits of automation, actually applying automated processes isn’t always straightforward. Retail businesses face many challenges when trying to implement automated processes – especially when it comes to AI adoption.
To have the best chance of successful automation in your retail business, knowing what you’re up against and the most common challenges other retail leaders face can help you avoid making the same mistakes. So, in this blog, we’re exploring those challenges and giving you our best advice for overcoming them! Just keep reading.
Introduction to Retail Automation
The retail industry is undergoing a significant transformation with the advent of retail automation. Retail automation refers to the use of technology to automate various retail processes, including inventory management, customer relationship management, and retail operations. The global retail automation market is expected to reach $33 billion by 2030, driven by the need for retailers to enhance operational efficiency, reduce costs, and improve customer satisfaction. By leveraging AI in retail, retailers can analyze customer data, streamline business operations, and provide personalized marketing and shopping experiences. Effective inventory management is also a key aspect of retail automation, enabling retailers to optimize supply chains and serve customers better.
The benefits of automation
Before diving into the challenges of automation, we want to begin with why it's so worthwhile to overcome them by exploring the key benefits of automation for retail and eCommerce businesses.
Happier customers and customer satisfaction
With automated customer service, warehouse operations, and personalised product recommendations, allowing customers to enjoy faster and more accurate responses from your brand, leading to higher satisfaction levels.
Accurate forecasting
With real-time AI updates, your order management system can perform demand forecasting, alert you to low stock levels, and help you manage inventory levels, so you can always stay ahead of customer demands.
Powerful marketing
Abandoned cart emails, personalised discounts, loyalty programs, and more can all be automated to keep your brand top of mind, encourage repeat purchases, drive brand loyalty, and help you compete by understanding customer preferences – without manual input.
Customer insights through data analytics
AI can predict customer behaviour and analyse patterns in a way humans never could. You’ll be able to understand your customer’s lifetime value, preferences, past purchases, and new behaviour that traditional analytics isn’t mature enough to understand. These insights lead to better targeting in marketing campaigns and more powerful customer relationships.
Automation challenges
While the benefits of AI and automation for retailers and eCommerce owners reach far and wide, there's no doubt they're facing challenges with adopting these technologies. A whopping 60% of retailers surveyed by IDC have yet to implement AI technology. Read below to explore why, the challenges they face, and what you can do to overcome them.
Fear of change
Adopting new AI processes and automation technology can feel daunting for retail business owners. In many cases, there's a general preconceived notion that implementing a new AI chatbot or automated email system will disrupt the organisation or even take over people's jobs, which is rarely the case.
The solution? Successful change management processes are key here. You must analyse and communicate how easily teams can adopt your new AI technology, why it's worth it, precisely what roles it will affect, and how.
Not enough ROI
Another challenge retail and eCommerce businesses face is that implementing an AI solution for specific business processes won't give them a good enough return on investment and is too risky.
The solution? Develop a strong business case for particular automation or AI systems. Analyse your needs and estimate how much faster you can get specific tasks done using your chosen technology and at what cost to calculate rough ROI before investing.
Debilitated by data
Retailers must address a significant challenge when adopting a new AI or automated system: their data quality, volume, and accuracy. Many retailers don’t have sufficient tracking or data analytics, making them less likely to adopt AI to make the most of what they have.
The solution? AI and automated systems are vital for helping segment data, analysing trends, and forecasting demand, giving you the power to make informed marketing, business, and strategic decisions. No matter your data quality now, implementing AI will only get better as time goes on and more data becomes available.
Culture wars
You'd be surprised how many retailers don't adopt sufficient AI or automation models due to a lack of “innovation” culture. All major decisions with spending come from the top – down. So if upper management is sceptical of automation, AI and automation champions will have a hard time convincing them it's a good use of resources.
The solution? Develop a solid and profit-focused strategy to get higher-ups onboard and an informative, impactful communications strategy to go along with it. Highlight the benefits, impact, and changes that an AI or automation solution will bring about within your organisation to reassure board members and key stakeholders that it's possible (and a great idea!)
New data laws
With cross-domain tracking in decline, retailers cannot underestimate its impact. We saw this particularly with Google promising to remove third party cookies in Chrome by 2022 and Apple promoting an “opt-out” option for third-party data sharing with Facebook. With major political controversies pushing for better data privacy laws, retailers may fear a lack of data governance.
The solution? AI and automation allow you to create enhanced data insights on your customers, protecting you from losing the essential data you’ve compiled through third-party trackers on Google, Facebook, and other online platforms, and leading to significant cost savings.
Retail Automation Technologies
Retail automation technologies include artificial intelligence, machine learning, robotic process automation, and the Internet of Things (IoT). These technologies can help retailers automate routine tasks, identify trends, and make data-driven decisions. AI solutions can also help retailers improve customer service areas, such as chatbots and virtual assistants, and enhance the overall customer experience. Predictive analytics is another key technology that can help retailers forecast sales, optimize inventory levels, and identify new sales opportunities. By implementing automation in retail, retailers can reduce labor costs, increase operational efficiency, and improve profit margins.
Implementing Automation
Implementing automation in retail requires a strategic approach. Retailers need to identify areas where automation can have the most impact, such as inventory management, supply chain processes, and customer service areas. They also need to invest in data analytics and AI solutions to analyze customer data and make informed decisions. Additionally, retailers need to consider the human factor and ensure that automation complements human capabilities, rather than replacing them. By leveraging AI and automation, retailers can enhance efficiency, reduce costs, and improve customer satisfaction. It’s also important for retailers to stay up-to-date with new technologies and trends in the retail industry, such as dynamic pricing and automated order processing, to remain competitive.
DIGITALGENIUS: Retail Automation Made Easy for the Retail Industry
Approaching these challenges strategically and focusing on analysing and communicating the benefits will bring greater visibility, accuracy, and efficiency to your retail or eCommerce business, helping you stay competitive, agile, and customer-centric. Want an AI-powered CX solution that addresses adoption challenges by being super easy to implement? Try DigitalGenius.
DigitalGenius is a powerful AI-driven CX platform that automates tickets, delivers conversational assistance that talks like an actual human (in multiple languages), and connects with your existing tools to process customer queries such as refunds and order status requests!
If you’ve been searching for a user-friendly solution to reduce ticket resolution time, allow agents to focus on more complex tickets, increase CSAT, and meet evolving customer demands, DigitalGenius is the platform for you.
Book a demo to see it in action today!
Conclusion
In conclusion, retail automation is a key driver of business growth and competitiveness in the retail industry. By leveraging AI and automation, retailers can improve operational efficiency, reduce costs, and enhance customer experience. Retailers need to invest in retail automation technologies, such as artificial intelligence, machine learning, and predictive analytics, to stay ahead of the competition. They also need to consider the human factor and ensure that automation complements human capabilities. As the retail landscape continues to evolve, retailers need to be prepared to adapt to new technologies and trends, such as AI-powered chatbots and automated inventory management. By doing so, they can improve customer satisfaction, increase sales, and maintain a competitive edge in the market. The use of automation in retail can also lead to higher sales, increased customer loyalty, and positive word of mouth, ultimately driving business growth and success.
