Retail To Lead Global AI Spending In 2019 As Market Reaches $35.8b

 

Nowadays it’s common to hear tech experts talking about “AI” or warning about it. Also known as artificial intelligence, AI has become, at times, a controversial technology. In 2018, for example, Elon Musk issued a highly-publicised warning about the dangers of AI. 

 

Despite apprehensions about AI, the technology is being widely adopted across a diverse range of industries. According to a new report by tech company IDC, AI spending is up over 40% in 2019, to $35.8 billion. It could reach nearly $80 billion in 2022. 

 

The retail sector, which is leading AI spending across industries, could see a massive transformation from adopting AI.

 

 

 

While regular computer programs can automate simple tasks, AI is a new form of advanced technology that can do much more. As described by Innoplexus, AI works by “enabling machines to learn from experience and perform human-like tasks.” 

 

In contrast to programs that rely on human input to make decisions, AI-enabled machines can make intelligent decisions on their own. This opens up the opportunity to have these AI devices and systems replace human beings in tasks or decision making.

 

 

 

Globally, there have been signs that countries are now in a race to control, or survive, artificial intelligence. According to The Verge, the US and China are seen as the front-runners in artificial intelligence, with both nations making significant investments into AI research. The report indicates that Russia and other countries are also striving for a leadership role in AI.

 

 

 

When it comes to spending by industry, the retail sector has been leading the charge. According to IDC’s report, retail leads spending in AI in both the US and Western Europe. Retail is closely followed by the banking industry.

 

 

The retail industry will spend around $5.9 billion on AI in 2019, according to IDC. The next industry as ranked by spending is banking with $5.6 billion. Others that round out the top five are:

Significantly, while other industries lag the leaders in adopting AI, the rate of growth of AI investment is picking up. IDC forecasts that these industries will have the fastest growth in their AI spending as measured from 2018 to 2022:

 

 

IDC’s report sheds light on the areas in which businesses are spending on AI. Based on IDC’s data, there is considerable variety of the uses to which businesses are allocating their AI spending. The top single use cases, however, are as follows:

Other top priorities for AI spending include diagnostic systems, fraud prevention systems, and intelligent process automation.

 

 

 

IDC was able to pinpoint practical advantages for retailers that have invested into AI spending. The subjects covered in IDC’s retail analysis include retailers like ASOS, Zara, and Sephora. Their experience indicates a positive return on investment from spending on AI. 

 

According to IDC, the industry adoption of process automation has now become more or less mainstream. Process automation leads to lower costs and higher efficiency for retailers. Attention is now shifting to “next-generation” predictive systems and systems for greater personalization.   

 

 

 

The potential for artificial intelligence systems to reduce operating costs will appeal to retailers that might have been skeptical about AI. Reducing costs will make your business more competitive and enable you to pass on cost savings to the customer. 

 

According to ComputerWeekly, costs can be reduced in retail by implementing systems such as chatbots. The publication noted that retailers like Boohoo had already implemented similar systems. Such AI investments allow retailers to operate customer support with a smaller staff and lower costs.

 

 

 

Increasing store visits is another category in which AI systems can help retailers. The increased personalization of the shopping experience, which is made possible by AI, can be a draw for customers. 

 

As noted by Scurri, Amazon has used this kind of technology in its recommendation engine in order to drive up to 35% of its revenue. Similar AI can help drive customers to visit your store to try new products that would be a match for them.

 

 

 

While big retailers and large multinationals might have data science teams to craft AI solutions, many retailers work with smaller teams. AI might seem daunting and incomprehensible.

 

However, you can look at how others have adopted AI and begin learning about AI from their experiences. For a retailer in search of inspiration on adopting AI, the following case studies offer a guide to the immense possibilities.

 

 

 

Fashion retailer Zara used artificial intelligence to improve the customer experience during in-store order pickup. As reported by RetailDive, Zara has been automating in-store order pickup with robots in some of its stores. 

 

A customer is requested to scan a code when they enter Zara’s store to pick up an order placed online. A robot begins moving their order and delivers it to them quickly via a drop box. This has helped to make the company’s popular in-store pickup option even faster for customers.

 

 

Skin care brand Olay has been putting AI to work in the skin care industry as well. Fortune reported that the brand’s Olay Skin Advisor applied proprietary AI technology to personalize skin care advice. 

 

Using the Olay Skin Advisor, a user has to upload a selfie into the intelligent advisor. The user then answers a questionnaire. The AI then comes up with a personalized care plan along with product recommendations for the user.