Tech expert on balancing the risk and opportunity of GenAI in retail

Artificial intelligence, otherwise known as AI, has been a major topic in the retail industry in recent years, especially how businesses can use this technology in content creation and supply chains.

In fact, SkyQuest, a global market intelligence, innovation management and commercialization organization, estimated that the value of AI in retail was worth just $7.42 billion last year, but would grow to reach $94.55 billion by 2031, representing a compound annual growth rate of 32.68 per cent during the forecast period.

A global survey by the IBM Institute for Buisness Value collected responses from 3000 CEOs from over 30 countries and 26 industries, confirming that GenAI specifically is a high area of focus in the retail industry.

How are retail executives thinking about generative AI?

As Matt Candy, IBM Consulting’s global managing partner stated, “There is incredible excitement around generative AI, and CEOs want to move beyond the AI hype to deliver business impact.”

Here are a few noteworthy revelations from the survey:

Prioritizing staffing to focus on generative AI innovations

Fifty-one per of CEOs surveyed say they are hiring for generative AI roles that did not exist last year, whereas 47 per cent expect to reduce or redeploy their workforce in the next 12 months because of generative AI.

Promoting innovations over potential risks

Sixty-two per cent of CEO respondents expressed that they will take more risk than the competition to maintain competitive edge, with 51 per cent agreeing that the risk of falling behind is driving them to invest in some technologies before they have a totally clear understanding of the value.

Additionally, 41 percent of respondents said that they are willing to sacrifice operational efficiency for greater innovation.

Desire for clear set of rules

Even though 75 per cent of CEOs surveyed say trusted AI is impossible without effective AI governance in their organization, only 39 per cent say they have good generative AI governance in place today.

While there is clear evidence for interest and investment in the field of generative AI, organisations must decide on limits to promote efficiency and company well-being, especially as it is unclear how incorporating AI will affect job security amongst lower-level employees.

As Candy warned, “Without the right people and culture in place, progress will be slow. As they embed generative AI in their enterprise strategy, it’s critical that executives build a cultural mindset that fosters adoption and lead people through the changes.”

Regulating AI in the retail industry

Fred Schonenberg, the founder and chief executive officer of VentureFuel, discussed the need to understand and manage the risks of GenAI at Shoptalk earlier this year, on a panel with Walmart’s senior vice president and chief counsel of digital citizenship, Nuala O’Connor.

As Schonenberg reiterated to Inside Retail, “How do you mitigate and manage risk where there is a great opportunity?”

He noted that there are many unknowns in the field of AI, especially considering that it requires different levels of regulation depending on the state and the country in which the service is used.

Then, Schonenberg continued, there are concerns about internet protocol when gathering data and images for an AI program to learn from.

There needs to be transparency around where the information is being gathered from and where the original works are sourced from.

To avoid creating a distorted set of data that could alienate the customer, such as racial bias, Schonenberg warned that retailers “have to be careful about what data your models are being trained on and to make sure your data is robust and representative of what you need it to be and what it should be.”

To solve this specific issue, Schonenberg said that retailers should work with startups specifically trained in catching biases that may otherwise go unnoticed. For retailers moving forward into AI explorations, Schonenberg recommended a four-step process, “learn, test, build, and invest.”

Learn how the application can be used for the specific business, test it out on a small, but fast-paced level, figure out areas where the tech can be customized and built up, and then invest the time and capital to further incorporate AI into a company’s framework.

Despite the rapidly changing territory of AI developments, Schonenberg is enthusiastic about the potential for AI to impact retail.

“If you think about the history of the world, anytime there’s great opportunity, it comes with great risk… That balance [between the two] is there if you’re investing in the stock market or in life, so the most interesting things also often have a lot of risks to them.”

Originally published at Inside Retail

Learn more:

Download the copy of Fred and Nuala's presentation from the Shoptalk 2024 Event here.