In the span of a year, the landscape of artificial intelligence has undergone a remarkable transformation. Until late 2022, few people outside of cutting-edge artificial intelligence had heard of large language models (LLMs) or generative AI (GenAI).
By Sheetal Patel, retail lead and Junaid Kleinschmidt, digital marketing strategy and intelligence lead for Accenture, Africa
Now, it’s a different world. When OpenAI revealed ChatGPT, it created an explosion of global interest and excitement on a scale we’ve rarely seen before. Since then, companies like Google and Meta have created their own LLMs.
It seems everyone – from school students to seniors to C-suite executives – is talking about how it’s going to change everything.
And they’re right. Here in South Africa, our market throws some real curveballs that really put our resilience and adaptability to the test. From the ever-present issue of load-shedding to the impact of high inflation driven by soaring fuel prices, coupled with a concerning unemployment rate and a challenging economic outlook, it’s clear that we operate in a challenging environment.
In this context, GenAI represents a step change in capability because it’s both incredibly powerful and incredibly flexible. And it’s that adaptability which means it’s going to reinvent the way companies run their businesses, serve their customers, and get work done.
Retail is right at the centre
For retailers, this is a once-in-a-generation opportunity. Embedded into the enterprise digital core, GenAI will transform their ability to optimise tasks, manage data, create faster insights, innovate with new experiences, augment front-line workers, and connect and communicate with customers.
Accenture’s Technology Vision 2023 research found almost all (96%) retail executives are saying they’re very or extremely inspired by the new capabilities offered by foundation models – the technology that underpins GenAI applications like ChatGPT.
The same research found more than nine in ten executives saying foundation models will play an important role in their retail strategies in the next three to five years. And over half of those surveyed already have their eyes on Generative AI experiments in areas like customer support and process automation.
It’s not hard to see why the industry is so excited. Let’s consider just a few of the ways retail will be impacted.
New ways to engage with customers
We’ve all seen how effective ChatGPT can be at conversing, answering questions, and summarising information in a natural, engaging, and relevant way. It’s easy to see how this could be extended to retail customer support — responding to queries, explaining products, offering product recommendations, and more.
Retailers have a golden opportunity to transform their businesses and enhance customer experiences through the strategic use of AI. This allows them to tap into the power of hyper-personalisation, tailoring unique offers to individual customers and creating a personalised shopping experience.
AI doesn’t stop there – it can also boost sales in physical stores by facilitating cross-selling and upselling of products and categories. The shift towards “click to delivery” shopping, accelerated by the Covid-19 pandemic, provides a ripe moment for retailers to integrate GenAI chatbots into mobile apps and digital channels. These chatbots not only predict optimal shopping baskets but also recommend discounts, reducing costs and optimising supply chain stock.
With over 94% of global consumer purchases being digital, the potential extends to areas like product design and marketing. Fine-tuning foundation models on existing designs enables retailers to instantly generate brand-relevant content, opening the door for customers to customise products according to their unique needs.
Every role in every retailer has the potential to be reinvented, where people working with “AI co-pilots” becomes the norm. We can also expect a large number of new tasks for people to perform, such as ensuring the accurate and responsible use of AI systems.
It’s why organisations that invest in training people to work alongside GenAI will have a significant advantage.
Leading South African brands are already forging ahead with the implementation of AI.
Shoprite, for example, successfully deployed a powerful end-to-end supply chain software solution to ensure highly accurate orders. Using machine learning, the system considers a number of external factors when ordering ultra-fresh products including historical data to predict buying patterns of certain products.
The implementation was an immediate success, with substantially increased year-on-year sales growth and significantly reduced wastage.
Brands like Starbucks and others have been using AI algorithms to suggest personalised product recommendations for several years now. But GenAI’s ability to crunch vast amounts of data and provide insights in real time will take this to a whole new level.
Take Pick n Pay, for instance. Their app gives you access to more than 25 000 easily searchable products, all thanks to smart AI search technology. Plus, they’ve got pre-selected alternatives ready in case something is “out-of-stock”.
The search feature is like a helpful guide, making it easy for customers to find what they need, even if there are typos. What’s even more impressive is that the AI feature keeps learning from how customers shop, so it can always give you the most relevant and personalised results.
That’s important given how difficult retailers have traditionally found it to bring together some insights they have on their customers in a coherent way. GenAI will be the key that unlocks that vision – long talked about but as yet unrealised – of providing hyper-relevant retail suggestions to each customer in each moment.
New ways to run the business
GenAI stands out in its ability to distil valuable insights from a diverse array of unstructured data sources, making it particularly adept at tasks like demand forecasting and inventory management.
By tapping into sources such as historical sales data, market trends, weather conditions, and social media sentiment, retailers gain a more precise understanding of upcoming demand.
This, in turn, empowers them to mitigate stockouts, trim excess inventory, and enhance overall operational efficiency, ushering in a new era of strategic decision-making.
There’s also immense promise in areas like retail logistics, AI-powered route optimisation proves to be a valuable resource for retailers, particularly in the crucial last mile delivery phase.
Delivery platforms, such as those managed by Checkers Sixty60, have the ability to leverage AI for fine-tuning delivery routes, guaranteeing speedy deliveries to consumers while simultaneously cutting down on fuel costs for retailers.
Now, when it comes to boosting workforce productivity, Accenture found 40% of all working hours can be impacted by LLMs like GPT-4. This is because language tasks account for 62% of the total time employees work, and 65% of that time can be transformed into more productive activity through augmentation and automation.
Additionally, companies that harness the power of GenAI to reskill and train workers through faster, semantic searches and precise access to corporate knowledge-bases, particularly when fine-tuned on proprietary data, experience accelerated decision-making, heightened agility, and a competitive edge over rivals.
Stores will be transformed too
In recent years, retailers have been focused on blending physical and digital experiences in their stores. This is another area that GenAI promises to radically enhance.
Let’s look at virtual try-ons. With GenAI able to produce extraordinarily lifelike images on demand, apparel and beauty retailers will be able to provide “magic mirror” experiences that show how different products, styles and colours would fit a customer – and even predicting how that fit would change over time.
Consider Estée Lauder as an example. They’ve launched a helpful app called the Voice-enabled Makeup Assistant (VMA) to assist people with visual impairments in applying makeup on their own. Created in partnership with Accenture’s design studio, this app uses augmented reality and AI to analyse how makeup is applied, offering audio feedback and customisable features. This allows users to adjust on the fly, no matter the brand of makeup they use.
Technology steps in not just for virtual try-ons but also in creating store layouts that maximise shopping baskets. This, coupled with strategic branding and visual merchandising, opens up better opportunities for upselling.
In the current era of a proliferation of digital touchpoints for consumers brought about by a highly connected environment, retailers need to proactively enhance customer experiences.
A buyer experience benchmark study reveals that 76% of consumers will stop doing business with a company after just one bad experience. It’s about leveraging technology to make the shopping journey more engaging and tailored to individual preferences.
Infinite possibilities
We’re only at the start of the GenAI revolution. And we’ve only had a taste of the true impact on retail.
But the technology is advancing incredibly fast. That is why it’s critically important to ensure AI is used responsibly. That means setting guardrails for acquiring, refining, and deploying data. It also means thinking through cybersecurity operations.
Managing regulatory and privacy risks is a good start, and retailers can take it a step further by making certain the technology they’re using is responsible by design.
There’s little doubt that, soon, strong GenAI capabilities will be a baseline requirement for any retailer that wants to keep pace with its peers.
Retail leaders should rely strongly on this exciting technology – and start exploring how it can transform the way they run their businesses and serve their customers. It’s an overused phrase but this time ‘test and learn’ can be a true strategy for how to lean-in and keep-up with the latest AI trends.