Artificial intelligence in retail: 6 use cases and examples
Six use cases for AI in retail, including optimizing inventory management, improving forecasting, and personalization.
The retail industry in the Asia Pacific (APAC) region, which is home to 60% of the world’s population including two of the most populous nations (China and India), is experiencing tremendous change. Growing urbanization, development of megacities, widespread mobile adoption and internet use, and consumer proficiency with advanced technology are all driving growth in the industry—and forcing it to change.
Innovating the retail model is critical for capturing the APAC consumer’s loyalty and steering the industry towards sustainable growth and relevance. Traditional paradigms no longer suffice to meet fast-evolving consumer demands.
The digital age demands a new retail concept—one that harmonizes the digital with the physical, personalizes customer experiences, and leverages data and technology to create seamless, omnichannel journeys.
Here, we take a closer look at three APAC retail trends reshaping the industry.
- Data analytics
- AI in retail
- Omnichannel shopping
APAC retail: Harnessing the power of data
The National Retail Federation’s inaugural Big Show Asia Pacific showcased the immense potential of the APAC retail market and the innovative technologies poised to shape its future, emphasizing the importance of adapting to this dynamic and diverse region.
Held in Singapore in June, the three-day event attracted more than 7,000 registrants and 238 exhibitors from around the world. One of the top trends at the show was growing use of analytics.
With abundant data available, retailers are transitioning from using past insights to gaining foresight for predicting future trends. Global events like the Suez crises and the more recent Baltimore mishap have made global supply chains far more complex, leaving retailers vulnerable.
Retailers are using data analytics to improve their operations, including supply chain, inventory management, demand forecasting, and procurement. Analytics also helps retailers spot areas for improvement, giving the insight needed to boost customer experience.
According to Mordor Intelligence, the Asia Pacific market for retail analytics solutions is expected to grow from $9.28 billion this year to $18.21 billion by 2029.
SAP’s Digital Experience Center at the NRF show demonstrated a modern cockpit for today’s retailer that collects end-to-end data of different business processes. Data is presented in a clear and easy-to-understand manner, providing insights for all business aspects.
Artificial intelligence in retail
AI is one of the hottest trends in the global retail industry, including APAC. Working together with data analytics, the technology can help automate and improve retail operations, including forecasting, pricing, and personalization.
A global survey of retail professionals by NVIDIA found that AI is already getting results in the industry. Sixty-nine percent of the 400 retailers surveyed reported an increase in annual revenue attributed to AI adoption. Seventy-two percent reported lower operating costs.
According to Statista, retailers that use AL and machine learning outperform their competitors, with their annual profits growing by about 8% from 2023 to this year.
SAP’s Digital Experience Center at NRF showed how Joule works as a conversational AI co-pilot so that users can interact with data in natural language, draw insights, get recommendations, and take action.
APAC retail and the omnichannel challenge
NRF participants noted that the widespread use of mobile devices means consumers are never far from any storefront, creating challenges in becoming the preferred merchant and ensuring a seamless experience across all platforms.
They also acknowledged APAC’s diversity and size as challenging, contrasting it with the largely single markets of the US and China.
CBRE expects Asia Pacific’s e-commerce penetration rate to grow to 35% by 2026, with Korea, mainland China, Indonesia, Australia and Taiwan the region’s top e-commerce markets.
But brick-and-mortar shopping remains tremendously popular— 99% percent of APAC shoppers use offline channels, according to NielsenIQ. In 2022, the number of omnichannel shoppers was 79%, up from 22% in 2019.
The growth of omnichannel shopping in APAC, including social and live commerce, means business models must continue evolving to deliver seamless experiences between online and offline channels, NielsenIQ said.
“Today’s shopper moves more fluidly across retailers and channels, making it even more challenging to see the full landscape and how to prioritize opportunities.”
Building for sustainable growth
Like other industries, retail is striving to increase profitability while maintaining sustainability—a challenging balance to achieve.
While technology can empower you to overcome some of the above challenges, the proliferation of new technologies has left leaders scrambling to figure out which technology to deploy and in what order to avoid technical debt and extensive rework.
SAP’s stable core foundation, which supports operational, supply chain, and governance processes, helps businesses focus on adopting new technologies without incurring technical debt.
