January 13, 2025
PeopleImages.com/Depositphotos.com
Should Retailers’ Gen AI Concerns Be Increasing?
NVIDIA’s second annual “State of AI in Retail and CPG” study found retailers ramping up investments in generative AI (Gen AI) as over 80% are either using or piloting projects. However, concerns over the use of the technology are also growing.
The concern increasing the most year-over-year was the cost of implementation, cited by 57% of retailers surveyed as a concern around Gen AI, up from only 25% in 2023. NVIDIA said that as companies shift past pilot projects and assessment periods, concerns about the cost of scaling existing projects into production and expanding use cases was expected to grow.
Other major concerns relate to data privacy and security.
The top concern remained data privacy, cited by 60% of retailers surveyed, up from only 42% a year ago. Relatedly, data security was a concern for 49% of retailers, up from 38% the prior year. NVIDIA wrote in its report, “Generative AI models are well known to be data hungry, and companies want to make sure that data is safe, secure, and working for their company’s interests.”
Relatedly, 49% of respondents were also concerned about the regulatory and legal issues, including generative AI-created texts and images. The issue wasn’t explored in the year-ago survey.
The fifth-highest Gen AI concern was misuse of the technology, cited by 41% of retailers, up from 21% a year ago.
One area seeing less concern was Gen AI leading to human job loss. Only 16% of retailers surveyed cited job displacement among their top three concerns this year, down from 21% in 2023.
Consistent with last year’s survey, over 50% of retailers believe that Gen AI is a strategic technology that will be a differentiator in the market.
The top use cases for Gen AI in retail included:
- Content generation for marketing (60%).
- Predictive analytics (44%).
- Personalized marketing and advertising (42%).
- Customer analysis and segmentation (41%).
- Digital shopping assistants or copilots (40%).
Broader analysis in NVIDIA’s study showed 97 percent of retailers project AI investment overall will grow in the next year as use cases mature, AI applications spread to other operational areas, and robotics technology matures to support physical AI.
Other recent surveys show consumers seeing potential in Gen AI tech.
Capgemini Research Institute’s fourth edition of its annual consumer trends report, “What Matters to Today’s Consumer,” found 71% of consumers wanting Gen AI to be integrated into their purchasing experiences. Capgemini said, “The preferences of younger cohorts, particularly Gen Z and millennials, for hyper-personalization and seamless digital experiences are driving this trend.”
Over half (58%) have replaced traditional search engines with Gen AI tools for product/service recommendations, up from only 25% in 2023. Three-quarters are open to Gen AI recommendations when online shopping, up from 63% in 2023.
A recent survey from Bain of 700 online shoppers in the U.S. found roughly half see “significant or transformative potential” in Gen AI within the shopping experience. However, 71% were not aware of having used Gen AI in their online shopping, even though most had shopped recently with retailers where they were likely to have encountered them. Bain said transparency around Gen AI use will be critical for retailers as the survey showed that obvious errors, inaccurate product information, or irrelevant recommendations coming from Gen AI can quickly erode.
Bain wrote, “Generative AI is a new technology, and people have mixed feelings about new things, particularly when they are so powerful. Retailers are asking customers to join an experiment, so building and maintaining trust is essential.”
BrainTrust
Mark Self
President and CEO, Vector Textiles
Nolan Wheeler
Founder and CEO, SYNQ
Neil Saunders
Managing Director, GlobalData
Recent Discussions
Discussion Questions
Do retailers need to adjust or add more safeguards to their approaches to Gen AI given heightened concerns?
Which challenges or threats around Gen AI should be most concerning to retailers?
Poll
Loading …
I don’t think concerns should be increasing, and I maintain that Generative AI holds a lot of potential. However, I do think a good dose of realism is needed when it comes to AI – especially in terms of what it can do and how well it can do it – as there is far too much hype at the moment. There are two dimensions to this. First, should AI be doing something? This especially applies to customer-facing functions. Second, is AI accurate? In essence, thought and checks and balances are needed when it comes to AI and retail.
honestly, I can’t see past the hype. I see no real evidence of anything substantive.
I agree with you, Paula. Way too much hype. Now I don’t think AI is as bad as the metaverse hype – but what that showed is that too many companies were willing to jump on whatever bandwagon is passing without sensible thought. Retailers need to be grounded and practical.
The retail industry needs AI to create smarter, smoother, and more satisfying experiences for customers and associates. Better inventory management, operational efficiency, improved customer service, empowered store associates, security enhancement, improved sustainability, and faster decision-making will benefit retailers.
I completely agree, David. One of the biggest advantages of AI in retail might be it’s ability to track trends and generate actionable insights. That said, implementing AI responsibly – especially when it comes to privacy and security – will be key to it’s long term success.
Generative AI is still in early stages and as such should be rolled out and implemented slowly. Remember during the gold rush the entities that profited for the most part were the suppliers to the prospectors. Same thing could happen here.
If cost of implementation is an issue, they’re not using generative AI to solve the right problem. Or they’re not solving valuable problems. When the payback is there, investments happen quickly.
Retailers using Gen AI should have safeguards in place around data privacy and security, bias and fairness, and overcoming AI hallucinations. These should be considered table stakes for anyone leveraging the tech moving forward.
In addition to adding safeguards to their approaches to Gen AI, retailers need to be more transparent and upfront with customers about how they’re leveraging the technology, and how it improves the shopping experience. Oftentimes, consumer’s concerns stem from a lack of awareness and understanding.
Generative AI holds a tremendous amount of potential across a wide variety of applications. Is it early in the AI game – yes – absolutely. But there is far more than hype if one digs into the actual uses. And as far as accuracy, garbage in is garbage out. Gen AI does require some learning to learn how to use it properly and where not to use it. But this is more than hype and has far more real-world applications than the metaverse does at this present time (although I personally believe that the metaverse was just ahead of its time and as AI grows, the metaverse is going to sync up with it over time).
Concerns are warranted as long as they don’t turn into paralyzing fear. Costs will go down dramatically over time with compute. Skate to where the puck is going. Deborah Weinswig told me at NRF, her advice is to start with security, and I agree, it’s a top concern. AI is increasing productivity gains 30-50% across creatives, software engineers, marketers, etc., a cost proposition too significant to ignore. At i-Genie, we deliver better, faster and cheaper consumer insights at a fraction of the cost of traditional consumer surveys. There are tons of applications where cost is actually THE REASON you need to adopt AI. Bottom line is that if you don’t invest in the AI tech to compete, you are going to be left behind.
Privacy, security, data accuracy and regulatory compliance related to GenAI are among the top concerns retailers need to consider. The rapid pace of AI innovation is far ahead of the retail industry’s ability to safeguard stakeholder groups with global standards.
More Discussions
How Important Is ‘Vibe’ in Physical Retail?
Not attempting to be too playfully groovy about this question: According to a recent report from…Will Pinterest Translate to Shoppable TV?
Will Pinterest lead the way in shoppable TV?How Can Retailers Improve Shoppers’ Sense of Closure When Concerns Emerge?
How can retailers better provide closure and proper resolution to today’s shoppers?
I don’t think concerns should be increasing, and I maintain that Generative AI holds a lot of potential. However, I do think a good dose of realism is needed when it comes to AI – especially in terms of what it can do and how well it can do it – as there is far too much hype at the moment. There are two dimensions to this. First, should AI be doing something? This especially applies to customer-facing functions. Second, is AI accurate? In essence, thought and checks and balances are needed when it comes to AI and retail.
honestly, I can’t see past the hype. I see no real evidence of anything substantive.
I agree with you, Paula. Way too much hype. Now I don’t think AI is as bad as the metaverse hype – but what that showed is that too many companies were willing to jump on whatever bandwagon is passing without sensible thought. Retailers need to be grounded and practical.
The retail industry needs AI to create smarter, smoother, and more satisfying experiences for customers and associates. Better inventory management, operational efficiency, improved customer service, empowered store associates, security enhancement, improved sustainability, and faster decision-making will benefit retailers.
I completely agree, David. One of the biggest advantages of AI in retail might be it’s ability to track trends and generate actionable insights. That said, implementing AI responsibly – especially when it comes to privacy and security – will be key to it’s long term success.
Generative AI is still in early stages and as such should be rolled out and implemented slowly. Remember during the gold rush the entities that profited for the most part were the suppliers to the prospectors. Same thing could happen here.
If cost of implementation is an issue, they’re not using generative AI to solve the right problem. Or they’re not solving valuable problems. When the payback is there, investments happen quickly.
Retailers using Gen AI should have safeguards in place around data privacy and security, bias and fairness, and overcoming AI hallucinations. These should be considered table stakes for anyone leveraging the tech moving forward.
In addition to adding safeguards to their approaches to Gen AI, retailers need to be more transparent and upfront with customers about how they’re leveraging the technology, and how it improves the shopping experience. Oftentimes, consumer’s concerns stem from a lack of awareness and understanding.
Generative AI holds a tremendous amount of potential across a wide variety of applications. Is it early in the AI game – yes – absolutely. But there is far more than hype if one digs into the actual uses. And as far as accuracy, garbage in is garbage out. Gen AI does require some learning to learn how to use it properly and where not to use it. But this is more than hype and has far more real-world applications than the metaverse does at this present time (although I personally believe that the metaverse was just ahead of its time and as AI grows, the metaverse is going to sync up with it over time).
Concerns are warranted as long as they don’t turn into paralyzing fear. Costs will go down dramatically over time with compute. Skate to where the puck is going. Deborah Weinswig told me at NRF, her advice is to start with security, and I agree, it’s a top concern. AI is increasing productivity gains 30-50% across creatives, software engineers, marketers, etc., a cost proposition too significant to ignore. At i-Genie, we deliver better, faster and cheaper consumer insights at a fraction of the cost of traditional consumer surveys. There are tons of applications where cost is actually THE REASON you need to adopt AI. Bottom line is that if you don’t invest in the AI tech to compete, you are going to be left behind.
Privacy, security, data accuracy and regulatory compliance related to GenAI are among the top concerns retailers need to consider. The rapid pace of AI innovation is far ahead of the retail industry’s ability to safeguard stakeholder groups with global standards.