Retailers need to leverage AI to enhance operational efficiency

As AI positively impacts industry with tailored offerings and streamlined processes, BCG’s Jason Moy warns retailers against late adoption of new tech.

A recent survey conducted by Boston Consulting Group (BCG) points at the increasing prominence of Artificial Intelligence (AI) in the retail industry, which has always been a dynamic space that continually evolves to cater to the ever-changing needs of consumers.

Speaking to Retail Asia, BCG Partner and Managing Director Jason Moy highlighted the substantial benefits and the transformative impact AI can have on both customer engagement and operational efficiencies of retailers.
“AI will have a profound impact on retailers, profound impact, not just on how they engage and transact with their customers,” Moy said, noting that the “emerging trend in retail is the rise of AI.”

He referred to AI as having the ability to fulfill the long-standing retail mantra of delivering the right product, at the right place, and at the right time. He said it basically simplifies and improves various aspects of retail operations.

“With AI’s computational power and sophisticated algorithms, retailers can tackle complexities associated with different customer segments, channels, and occasions – something humans have found challenging in the past,” Moy told Retail Asia.

He acknowledged how digital-first retailers in Southeast Asia have been pioneers in leveraging AI’s power. Companies like Lazada and Shopee have built robust platforms that effectively utilise AI to refine customer experiences.

Another notable example is Shein, the Singapore-headquartered retailer, which harnesses AI from trend detection to manufacturing processes.

“Digital natives... have transformed a little bit of fashion retail, through leveraging AI,” Moy said. “Retailers spend a lot of money trying to promote products… [and] AI allows them to do that more efficiently and more effectively.”

Even traditional players are joining the fray. Sephora, for instance, is leveraging AI-driven technology to assist customers in determining the ideal beauty products suitable for their unique requirements.

Apart from enhancing the customer experience, Moy also mentioned intriguing use cases in the realm of operational efficiencies. From streamlining promotion management to redefining sourcing and procurement strategies, AI’s potential is boundless.

“Retailers and brands are now capitalising on AI’s prowess to ensure they deliver exactly what their customers desire,” he said.

When probed about BCG’s strategic recommendations for retailers keen on thriving in this evolving retail landscape, Moy asserts the importance of immediate action. Recognising the potential barriers to AI adoption, BCG advises businesses to identify pivotal use cases or proof of concepts where AI can bring unmatched value.

A detailed roadmap, encompassing the technicalities of data ingestion and platform-building coupled with ethical considerations, is paramount. “It’s essential for retailers to approach AI responsibly, setting clear guidelines and focusing on ethics,” Moy said.

Closing the conversation, Moy expressed his belief in AI as a transformative and enduring trend in the retail sector. His message is clear – retailers must take the plunge into AI, strategise efficiently, and be prepared to harness its unparalleled potential.

“There is a window of the next three to five years that is going to be super important for retailers in Asia, and getting it wrong will mean that you will be three to 10 years behind some of your peers as you try to catch up,” he said.