The Australian retail landscape is on the cusp of a new era and the way Aussies shop is vastly different when compared to five or ten years ago. Today’s shopper experience is defined by personalised engagement, innovation, and a deeper understanding of individual preferences.
In 2024, artificial intelligence (AI) continues to take centre stage across industries in Australia – with the retail sector at the forefront of adoption where 91% of ANZ retail businesses are investing in generative AI. A research by Avanade also found that 94% of retailers are confident of their organisation’s readiness to harness the benefits of AI much faster than competitors. This further fuels my firm belief in empowering retailers to lead the charge with an AI-first approach that unlocks competitive advantages for them.
The opportunity for retailers
The possibilities of AI in retail are varied and limitless, particularly in creating a more tailored and personalised shopping experience for Australian shoppers. It doesn’t stop there.
Beyond personalising recommendations, AI streamlines the purchasing journey and ensures customer interactions are quick, responsive and engaging. Our research shows that customers are also ready for the AI revolution. An encouraging 88% said that they believe their customers are ready for interactions and processes to be done through AI.
This paints a promising picture for retailers as they work towards creating better customer experiences. By using AI to enhance a customer’s shopping journey, retailers can now foster a deeper connection with their customer – and in turn, encourage loyalty, repeat purchases and heighten sales.
Furthermore, AI’s role in improving the day-to-day in-store operations cannot be overstated. From inventory management to supply chain logistics, the right AI tool will be able to use data and provide real-time insights – enabling retailers to make better informed, data-driven decisions.
Retailers can also expect optimisation across other parts of the business with AI – from improved inventory accuracy, to waste reduction and merchandise management, increasing operational efficiency and reducing costs.
Taking a pragmatic approach
Despite the enormous potential AI presents for businesses, we are confronted with what we term a ‘preparedness paradox’. Our findings reveal a stark reality – even though retailers are confident about their ability to adopt AI, only half have commenced the necessary human capital/workforce planning processes to safeguard roles as generative AI is scaled.
Additionally, 50% have either only implemented some specific guidelines for responsible AI, or are still in the process of developing guidelines and have not yet started implementation. And finally, 45% of retailers think significant support will be required to onboard/train workers to use generative AI tools.
As can be seen, retailers are undeniably still on their AI-readiness journey. While they navigate this, it is extremely critical for them to adopt a pragmatic approach to AI. It’s been exciting to see Australian retailers taking a progressive stance and are intent on setting the right foundations for AI.
Conversations with some of our local retail partners have shown that adoption of data and analytics platforms and cloud modernisation are at the top of their priorities for the coming months. This, in turn, will help local businesses enable incisive intelligence capabilities to weather a stormy economic landscape and ensure future planning for their retail stocks and customer preferences.
Above and beyond laying the right foundation, it is equally important for retailers to adopt an ethical and responsible approach to AI. Ensuring that AI is deployed ethically, with a commitment to fairness, transparency, and accountability, is non-negotiable. It’s essential for organisations to embed trust as a fundamental principle in their AI systems and equip staff with the knowledge to ensure successful AI integration and collaboration.
The shift towards an AI-first retail approach is not merely a trend but a strategic imperative for Australian retailers aiming to thrive in a competitive market. With the transformative power of AI and a pragmatic and responsible approach, retailers can confidently embark on this journey to realise their fullest potential and unlock new pathways for growth and success.
Corinna Reeves is products industry lead at Avanade Australia.