5 Challenges of Implementing Retail AI

The retail industry is poised for innovation. However, the IDC reports that a staggering 60% of retailers have yet to implement artificial intelligence (AI), one of the fastest-growing technologies in the world. 

AI provides ample opportunities and benefits for retailers to improve their operations, but implementation comes with its fair share of challenges. Will retailers overcome these setbacks to become more tech-driven and competitive?

Benefits of AI in Retail

Retailers can expect to reap several benefits by implementing AI-based solutions into their business models. For example, AI can help retailers improve customer service and experience, increase efficiency and productivity, and ultimately enhance profitability. 

Organizations in the retail space may even be able to garner new customers if they take on an attitude of innovation. This is crucial, especially as the e-commerce industry grows rapidly and competition becomes fiercer.

Consider how instrumental AI was during the COVID-19 pandemic. At this time, there were massive changes in consumer spending, increased unemployment rates and material shortages, leaving retailers to struggle with inventory management and supply and demand. 

5 Challenges Retailers Face When Implementing AI

As AI and machine learning (ML), a subset of AI, proliferate, it’s fair to say it will become ubiquitous across industries — retail is no exception. However, implementing AI is no walk in the park. Retailers may face barriers to AI adoption and implementation. Here are some of them.

1. Worker Displacement

Since AI’s inception and acceptance, it’s no surprise that people express concern over whether it will lead to widespread worker displacement. In big box stores and grocery stores, it’s common to see self-service checkout lanes or robotic custodians cleaning to help improve the customer experience. 

If AI continues to evolve, retailers may worry that it will displace employees. However, it’s become clear that AI — at its current stage — will likely serve as a supplement for human work. It has yet to reach an advanced level capable of eliminating the need for people. Still, worker displacement is a concern retailers may have that prevents them from adopting AI.

2. Fear of Change

Retail is not the only industry lagging in AI adoption. Several other sectors are slow to add AI, and one primary reason for this is the inherent fear of change. Implementing new technologies is something that every company should be willing to do, but that’s not the case. 

Fear of change is enough to prevent retailers from adopting and implementing AI solutions. It may seem too challenging to take on or would change operations and processes too much. 

3. Difficulty Keeping Data Secure

AI systems require massive amounts of data to function properly. Retail information is generated across multiple platforms and sources, making it difficult to clean, store and analyze to glean insights. 

Lacking a dedicated IT team or employees with deep knowledge of AI can be a major barrier to AI implementation. The last thing any retailer wants is to spend resources on AI only to have it fail to work effectively. Additionally, retailers must prioritize data security, especially in today’s increasingly threatening cybersecurity environment. 

4. Not Enough ROI

Implementing advanced AI or ML systems is generally expensive, especially for small or medium-sized businesses (SMBs). Many retailers lack the resources necessary to support AI initiatives, though the cost will likely decrease as time goes on and more retailers adopt these solutions. 

Without enough return on investment (ROI), implementing AI may seem like a waste of time, energy and resources for companies in the retail space. It’s important for any business, regardless of industry, to calculate the potential ROI of a new technology before implementing it. Retailers that do that may be able to reap the benefits of AI and start by adopting one or two new solutions. 

5. Employee Skills Gap

The final challenge retailers face when implementing AI is the employee skills gap. AI is still in its infancy, and most of the American workforce has little to no information about it. They don’t understand its potential, how it works, how to maintain AI-based solutions or why they’re growing in demand. 

Retailers may not be able to succeed with AI solutions without enough employees who have strong knowledge of AI and its inner workings. Companies that upskill their employees to understand AI better may be able to overcome this skills gap and successfully implement and use AI.

The Future of AI in Retail

It seems inevitable that AI will become more common across a wide range of industries, and retail is no exception. Implementing any new technology will come with its fair share of challenges, but many will provide ample benefits for companies that take the jump. 

In retail, companies can improve the customer experience, be more efficient and boost sales by implementing AI-based solutions. As AI continues evolving, the retail industry and others will continue benefiting from its capabilities.