The holiday season is officially over. And it was a good one, overall, for retailers at least, according to some early data: In November and December, preliminary numbers from Mastercard show consumer spending was up 3.8% over the previous year. Something else that rose this holiday shopping season? The use of artificial intelligence in retail.
One indication: According to new data from Salesforce, consumers used AI-powered customer service chatbots 42% more than they did a year earlier.
I don’t know about you, but I have yet to interact with a chatbot that I actually found helpful.
Katie Thomas at the Kearney Consumer Institute said even though there are more of them, she thinks some have actually been getting worse.
“Like, people are forcing the use of AI, but … it’s not that conversation, that dialogue where it’s supposed to be input and iterative,” she said.
We are in the age of AI, and retailers — like people in most industries — are scrambling to figure out how to use it to their advantage and not get left behind. “Everyone is trying to use it more,” Thomas said.
There are lots of ways better AI could benefit retailers and customers.
For customers, “the ideal use case is, ‘Oh, I’m looking for a black dress.’ ‘OK, what kind of black dress?’ And really have a dialogue and go back and forth,” she said. Then the AI chatbot helps the customer find something that fits what they’re looking for.
But, Thomas said, we’re not quite there yet.
Most retailers are still experimenting with newer uses of the technology. Christian Beckner at the National Retail Federation said 2024 was a big year for that.
“We’ve definitely seen an increase in their use of AI across a variety of applications,” he said.
Not just chatbots and other customer-facing technology, but also behind the scenes for things like preventing fraud and optimizing the returns process.
“Some estimates are upwards of $25 billion a year that retailers globally are spending on AI tools and services. So, definitely a big area of investment where retailers are seeing an opportunity to better serve customers, to be more efficient in their operations,” he said.
But Beckner said it’s still early to really know how much value they’re getting.
For retailers who are not particularly tech-savvy, said Sonia Lapinsky at AlixPartners, “there are so many options and shiny objects that they could deploy, it’s really hard for them to kind of get to the root of where they should start,” she said.
So far, where she’s seen AI benefit retailers the most is in those less flashy, behind-the-scenes operations — helping with pricing, inventory and personalizing and targeting emails and ads to customers.
