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What role will artificial intelligence play for international retailers?

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Translated by

Roberta HERRERA

Published



September 20, 2024

The majority of international retailers—79%—agree that artificial intelligence will fundamentally change the face of commerce in the years to come. However, despite its perceived potential, 54% of them have not yet introduced AI into their systems, according to a Havas survey conducted with 500 retailers in 21 countries*, revealed on September 17 during Paris Retail Week.

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When asked about their investment strategies in the current challenging economic environment, 38% of respondents pointed to increased investment in digital transformation as their top priority. This was followed by the development of innovative products, mentioned by 30%, with 28% focusing more on artificial intelligence. Meanwhile, investment in the metaverse, NFTs, or augmented and virtual reality dropped to 15%, signalling the end of a hype cycle.

AI ranked as the second most promising technological innovation, with 74% of respondents (39% of whom rated it “very promising”). However, it still lags behind faster delivery services, which were favoured by 93% of retailers. Other top innovations included cashless stores (73%), biometric payment systems (66%), the use of “superapps” like WeChat and Alipay (61%), and voice technologies (60%).

Where does AI fit into retailers’ digital transformation strategies? For now, it is mostly seen as an exploratory technology (28%) or a “secondary but important” component (23%). A significant portion, 20%, have yet to integrate AI, and 15% deem it irrelevant to their business. Only 14% of companies surveyed consider AI a “central part” of their strategy.

Clearly defined uses

Currently, 54% of retailers surveyed do not use AI in their operations. For those that do, it is primarily applied through chatbots and personal assistants (58%) and for marketing and sales forecasting (34%). AI is used less frequently for recommendation systems (23%), predictive stock and operations management (22%), supply chain automation and maintenance (17%), creative processes (17%), and fraud detection (17%). 

Havas Commerce

Among retailers using AI, the primary benefits observed include improved operational efficiency (45%), cost reduction (38%), and enhanced product information (31%). To a lesser extent, AI has also contributed to increased sales and conversions (29%), improved customer satisfaction (28%), more informed decision-making (21%), and the development of new products or services (14%).

However, AI also presents challenges. Chief among them is the high cost of AI solutions and the lack of in-house expertise, cited by 36% and 35% of respondents, respectively. Other concerns include the difficulty of integrating existing AI systems (27%) and the lack of quality data to train AI models (16%).

“This is where all the work done on data will have significant consequences,” said Vincent Mayet, founder and CEO of Havas Commerce. “Those who have lagged behind in managing and leveraging data will struggle the most to develop AI, simply because they lack the usable data necessary to power it.”

Ethical considerations

Retailers are also concerned about data privacy (32%) and the contentious issue of AI replacing human workers (19%). When specifically asked about the ethical implications of AI, 55% of retailers cited data privacy protection, 40% mentioned the question of responsibility in the event of AI errors, and 39% highlighted the potential loss of jobs. In fact, 35% of the panel believes AI will destroy jobs, compared to 43% who think it will merely transform them. Meanwhile, 21% foresee an increase in AI-related skilled jobs.

Havas Commerce

Among other ethical concerns, the panel pointed to the transparency and accountability of AI systems (31%), especially as more and more providers enter the market. Some 27% fear their data may be collected by AI giants, and 19% are wary of algorithmic biases and potential discrimination. Retailers also raised the issue of compliance with local laws (11%) and the dominance of American and Chinese AI companies, seen by some as a troubling oligopoly.

Strategies amid economic uncertainty

The Havas Commerce survey also explored the top concerns of retailers today. Updating their systems to keep pace with new technologies ranked third (13%), just behind geopolitical instability (14%), but far below economic concerns (46%). For 59% of the companies surveyed, the peak of inflation has yet to be reached, and 83% say they are impacted by the geopolitical situation.

In response to these challenges, businesses are focusing primarily on diversifying revenue streams (76%), increasing prices for goods and services (72%), reducing material expenses (67%), and, notably, promoting new loyalty programs (61%).

Havas Commerce

Have retailers adjusted their product range? Globally, 19% of respondents said they have shifted toward premiumization over the past year, while 36% noted a trend toward discounting. This shift is most pronounced in the Americas, with 21% premiumizing and 42% discounting, as well as in Europe, where 14% have moved upmarket and 32% have shifted downward. Europe, however, stands out for its strong tendency to maintain existing product positioning (53%).

*The survey was conducted from July 30 to August 19 across the USA, Mexico, Brazil, Denmark, the UK, Portugal, the UAE, Argentina, Sweden, France, Spain, Germany, Poland, the Czech Republic, Greece, Italy, India, China, Japan, South Korea, and Australia. Respondents included physical retailers, e-commerce, hybrid models, marketplaces, and direct-to-consumer businesses.

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