Retailers turn to AI for marketing, merchandising

Core Insights - The report from Berkeley Research Group emphasizes the importance of AI investments that specifically address business problems, highlighting key performance indicators such as average order value, inventory turnover rate, revenue, customer retention, and labor efficiency improvements [2] Group 1: AI Implementation Strategies - Companies are advised to integrate AI into a clearly defined target operating model rather than forcing it into existing processes, as AI can be costly and payback periods vary significantly [3] - Major retailers like Sam's Club are actively investing in AI, with initiatives such as the AI-powered Scan & Go app being implemented in 600 stores [3] - Levi Strauss & Co. has partnered with Microsoft to adopt a complex agentic framework across various functions, while Walmart has introduced its own AI framework focusing on customer-centric and operational agents [4] Group 2: Retailers' AI Applications - Target is leveraging generative AI to enhance sales and traffic, utilizing its AI platform, Target Trend Brain, for generating new ideas and evaluating vendors for its marketplace [5] - The retail industry is still exploring the long-term impacts of AI, with many retailers experimenting with AI in areas like search and product recommendations [6] Group 3: AI Adoption Statistics - Over 80% of retailers have integrated AI into their operations to a moderate or large extent, with North American retailers currently using AI for marketing (70%), IT and digital functions (62%), and digital commerce (56%) [7] - Future plans for AI deployment include areas such as planning and product flow (40%), corporate operations (38%), and supply chain and sourcing (36%) [7] - Despite the integration of AI tools, the report notes that the tangible business impacts of these technologies remain uncertain [7]