In an era marked by rapid technological advancements and economic uncertainties, the retail landscape finds itself at a critical crossroads. A recent global study conducted by the IBM Institute for Business Value sheds light on the escalating discontent among consumers with traditional shopping experiences, both in-store and online. With only a meagre 9 per cent expressing satisfaction with in-store shopping and 14 per cent with online alternatives, the findings underscore a pressing
essing need for innovation within the retail sector. Amidst these challenges, there’s a glimmer of hope in the form of artificial intelligence (AI). The study reveals a significant appetite among consumers for AI-driven enhancements to their shopping journey. Virtual assistants and AI applications emerge as key focal points, with over half of respondents expressing eagerness for their integration. This growing demand for AI intervention underscores a pivotal shift in consumer expectations, signalling an opportunity for retailers to reimagine the shopping experience. Joe Dittmar, senior partner and industry leader for retail and distribution at IBM Consulting, shared his views on the implications of these findings. A board member of the National Retail Federation (NRF) in the US, Dittmar brings a wealth of expertise and insights into the evolving dynamics of the retail industry. Diving in According to Dittmar, the key factors contributing to consumer discontent are rooted in a lack of personalised experiences and inefficiencies in both in-store and online shopping. “Our study found that dissatisfaction in-store also stems from a lack of variety and depth in product offerings, coupled with inefficient in-store processes such as slow checkouts. Online, the frustration is often due to inadequate product information and a cumbersome process for product returns, all of which are areas ripe for AI integration,” he told Inside Retail. He went on to say that consumers these days are not just buying products, they are seeking an enriched shopping experience, deeply integrated with technology. “Shoppers want personalised, seamless experiences that blend the physical and digital worlds, particularly through the use of AI, virtual assistants, and augmented reality,” he added. The modern consumer, often using a mobile device as a shopping aid, expects a seamless omnichannel experience that many retailers are still striving to provide, according to Dittmar. “For instance, augmented reality, powered by AI, can help customers see how a sofa looks in their living room or how a dress fits, all through their smartphones,” he noted. Dittmar also said that another practical example of this is an AI-powered menu creator that looks at the ingredients you have in your fridge and then suggests recipes and generates a shopping list for items you need, saving time and effort in meal planning and shopping. “This integration of AI simplifies decision-making and adds an element of excitement and engagement to the shopping experience, bridging the gap between digital convenience and the tangible, sensory experience of traditional shopping,” he said. In-store enhancements While some might think that physical retail is also about the power of human connection, Dittmar believes that retailers must leverage the power of AI and digital innovation to elevate the in-store experience. This includes deploying AI for personalised recommendations and assistance, using augmented reality for ‘try before you buy’ experiences, and providing real-time product information through mobile apps. “Our research indicates that a majority of consumers use their smartphones in-store. Retailers who capitalise on this by offering a more digitised, interactive in-store experience will lead the way in meeting modern consumer needs,” he stressed. He also said that effective use of AI-powered chatbots for customer service, user-friendly interfaces, and a seamless connection between online and offline channels can significantly enhance the consumer’s online journey, making shopping not just a transaction, but an engaging experience. “Imagine a virtual assistant that can sense distress or confusion in a customer’s voice or text message and respond with empathetic guidance to further build brand trust. This would create a more human-like interaction, transforming AI from a tool to something that understands and reacts to the nuances of human behaviour,” he opined. The bigger picture Dittmar said that consumers are eager to embrace AI throughout their shopping journey. According to the study, roughly four in five consumers who have not tried AI for shopping said they would like to use it to research products, look for deals, ask questions and resolve issues. “Personalisation and targeted offerings are in demand, with 52 per cent of consumers surveyed interested in receiving information, advertisements, and offerings from stores that are relevant to their specific interests,” he said. Dittmar believes that retailers need to adopt a holistic approach to customer experiences by leveraging AI for personalised services and modernising technology architectures for data connectivity. “They should empower employees with AI-driven tools for better customer engagement, ensuring a consistent experience across all channels,” he added. He also emphasised the need for retailers to optimise operations and strengthen partnerships, putting the right products in front of customers at the right time and responding quickly to shifts in demand. “Finally, increasing visibility into inventory and supply chain operations with AI-powered management systems is essential for efficient operations and strong partner relationships,” he concluded.