Retail leaders are increasingly concerned about rising costs, declining consumer spending, and supply chain volatility, according to a recent survey by Boston Consulting Group (BCG) and the World Retail Congress (WRC). The report, titled Amid Uncertainty, AI Gives Retailers a Path to Resilience, surveyed over 550 senior leaders from 12 retail sectors and found that most retailers are not addressing these concerns with long-term solutions like AI. Instead, they are focused on short-term fixes like increasing prices and running marketing campaigns.
The report suggests that retailers can leverage AI to create a next-generation pricing strategy by enabling geographic and channel-based pricing, dynamic price changes, and personalized offers, using machine learning to better understand price elasticity and make pricing forecasts, simulating and optimizing price changes across different price positions, promotion plans, markdowns, and personalization strategies, and monitoring relevant competitor and alternative data sources such as social media in real-time to respond to competitor moves and demand signals quickly.
The study also revealed that most retailers are neglecting AI as a tool to provide a more personalized shopping experience to help overcome declining consumer spending. Instead, the most common approaches were investments in loyalty programs, product offering optimization, price promotions, and digital customer experience investments. The report suggests that retailers can unlock strategic and financial value by starting their AI journeys and addressing their top concerns, identifying challenges the organization faces and how AI can help solve them while creating sustainable advantages, determining the use cases that can unlock the most business value, prioritizing these high-value use cases based on business opportunity, feasibility, and ambition, building, testing, and iterating the technology, and then scaling quickly to deliver fast impact, build capability, and transform the organization throughout the journey.
According to Tiffany Yeh, BCG managing director and partner and co-author of the report, "The new, post-pandemic retail environment is more challenging, complex, and competitive than before. The vast majority of retailers are overlooking an opportunity to embrace AI-powered solutions. It is now a matter of acting today to harness this advantage to drive the business into the future."
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