A new study from Juniper Research has found that global retailer spending on AI will reach $7.3 billion per annum by 2022, up from an estimated $2 billion in 2018, as retailers target new avenues to increase personalization of the customer experience.
The new research, AI in Retail: Disruption, Analysis and Opportunities: 2018-2022, found that retailers will heavily invest in AI tools that allow them to differentiate and improve the services they offer customers. These range from automated marketing platforms that generate tailored, timely offers, to chatbots that provide instant customer service.
Customer service and sentiment analytics to lead spending
Juniper’s latest research found that spending will be strongest in customer service and sentiment analytics, where AI can be applied to understand customer reaction to the products purchased and the service received. This will prove to be a key tool for retailers seeking to improve their customer experience.
In 2022 retailers are expected to invest in customer service and sentiment analytics (54%), AI-based Automated Marketing (30%), and demand forecasting (16%).
Juniper predicted that retailers will use AI insights to design and target new product ranges, as well as to create promotional offers.
Research author Nick Maynard highlights: “Retailers are looking to replicate the success of Amazon in making AI a core part of their operations, with retailers increasingly turning to solutions such as AI-optimized pricing and discounting, as well as demand forecasting.”
Demand forecasting crucial element of AI use
The research found that AI-backed demand forecasting is increasingly becoming a key tool for retailers. With the advent of specific days for shopping, such as the Black Friday phenomena, understanding customer demand and correctly planning based on this is more important than ever.
Juniper argues that retailers must invest in this area in order to stay competitive, particularly in low-margin retail segments. It noted that the cost of AI tools, currently uneconomical for many players, will drop by 8% over the next 4 years, helping realize a 300% increase in software spend.
You might be interested in Juniper Research’s complimentary whitepaper, Why Are Retailers Excited About AI? as well.