Expect generative AI to take center stage at this week’s National Retail Federation (NRF) 2024 conference, showcasing a plethora of advanced tools designed for virtual assistants, retail operations, and analytics. A Google Cloud survey highlights a significant eagerness within the retail sector: approximately 81% of retail decision-makers view the adoption of generative AI as urgent, with 72% planning to implement this transformative technology in 2024. Additionally, 78% of respondents believe generative AI will greatly influence the industry this year, and an impressive 95% recognize its potential to enhance customer experience.
“Retail is an exceptional field for generative AI due to its access to extensive consumer data and a conventional 'search' interface that aligns seamlessly with the conversational capabilities of GPT-like systems,” said Himanshu Jain, General Manager and Vice President of Product at CommerceIQ.
Before the NRF conference, tech giants Google and Microsoft have unveiled their new generative AI offerings, indicating the intensifying competition for this crucial technology.
**Google's Innovations**
Google introduces a suite of five generative AI tools tailored for retailers. The first is AI-powered virtual assistants, enabling retailers to integrate bespoke versions of these assistants into their websites and mobile applications. These assistants can adapt to customer preferences, such as color choices, budget limits, accessory requirements, and venue types.
For instance, imagine a virtual assistant aiding a customer in preparation for a hiking trip in the Rockies. The shopper could inquire about appropriate and affordable hiking gear, prompting the AI to suggest hiking boots, weather-resistant attire, a sturdy backpack, a compass, and a hydration pack.
Next is Vertex AI Search, a tool that empowers retailers to customize their catalog search capabilities and user queries, resulting in more pertinent search outcomes that can boost conversion rates.
Another significant offering is the customer service solution, which integrates Customer Relationship Management (CRM) systems with generative AI. This enables personalized product recommendations, appointment scheduling, and order status checks, alongside tools for employees that summarize customer interactions and generate responses based on internal data.
Additionally, the catalog enrichment tool automates the creation of product descriptions and metadata fine-tuned for search engine optimization (SEO). This process, often labor-intensive, can be streamlined significantly through the capabilities of generative AI.
Lastly, the Distributed Cloud Edge equips physical store locations with a hardware and software solution that allows access to AI applications, even in areas with limited internet connectivity.
Victoria's Secret is one of the early adopters of Google’s retail generative AI solutions, utilizing the virtual assistant and search functionalities while exploring generative AI applications in supply chain management, personalized employee onboarding, and training programs.
**Microsoft's Generative AI Suite**
Microsoft has also launched a comprehensive suite of generative AI applications specifically for the retail sector. The centerpiece is a series of new copilot templates available through the Azure OpenAI Service, allowing retailers to develop their own customized systems for virtual assistants and store operations.
Consider a scenario where a customer is eager to start a vegetable garden. They visit a home improvement store’s website and enter, “I’m starting my first vegetable garden and need advice on what to plant and how to care for it.” The copilot will generate a tailored response by leveraging the retailer’s product databases and pertinent information about the customer.
Moreover, Microsoft’s copilot designed for store operations offers employees insights into trends, product catalogs, store procedures, and HR policies, enhancing operational efficiency. This tool also features capabilities for voice-enabled task creation and assignment.
On a broader scale, Microsoft has integrated retail functionalities into its Fabric analytics platform and Dynamics 365 Customer Insights, bolstering retailers' analytical capabilities.
**Navigating the Challenges**
Despite its promise, generative AI presents challenges for retailers. The intricacies of large language models (LLMs) can lead to "hallucination," where the models produce inaccurate or misleading content. This can stem from sparse or incorrect training data, with the LLMs making connections or inferences that may not hold true. Such occurrences can negatively impact customer experiences and harm brand reputation.
To address this issue, grounding LLMs in clean and reliable datasets is crucial, yet this task can be daunting, especially for smaller retailers lacking the necessary expertise. Therefore, human evaluation of AI-generated content remains essential. Google has integrated this human oversight into its generative AI retail tools, underscoring the importance of accuracy and reliability in AI-driven interactions.
As generative AI continues to evolve, retailers must navigate these opportunities and challenges to enhance customer experiences and operational efficiency.
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