Retail AI spending to rise, predicts Juniper Research
Juniper Research predicts global retailer spending on AI will reach US$7.3 billion a year by 2022, up from an estimated $2 billion for this year.
Its report AI in Retail: Disruption, Analysis and Opportunities: 2018-2022 says retailers will heavily invest in AI tools that let them differentiate and improve customer services. These range from automated marketing platforms that generate tailored, timely offers to chatbots that provide instant responses to customers.
Juniper found that spending will be strongest in customer service and sentiment analytics, where AI can be applied to understand reactions to purchased products and service received.
It predicts retailer spending share in 2022 as:
1. Customer service/sentiment analytics, 54 per cent
2. AI-based automated marketing, 30 per cent
3. Demand forecasting, 16 per cent.
Juniper predicts retailers will use AI insights to design product ranges as well as create targeted promotional offers.
“Retailers are looking to replicate the success of Amazon in making AI a core part of their business,” says research author Nick Maynard.
He says retailers will increasingly turn to tactics such as AI-optimised pricing and discounting, as well as demand forecasting.
With the advent of specific days for shopping, such as the Black Friday phenomena, understanding customer demand and planning appropriately is more important than ever, says the report.
Juniper says retailers need to invest in this area in order to stay competitive, particularly in low-margin retail segments. Also, the cost of AI tools, now uneconomical for many players, will drop by 8 per cent over the next four years, helping realise 300 per cent growth in software spend.