Retailers go beyond the buzz to explore AI’s potential

If NRF 2024: Retail’s Big Show was any indication, the retail industry believes AI stands for “all in.”

With more than a dozen AI-specific exhibitors in the Innovation Lab and many more throughout the Expo, dedicated AI sessions, and statements from executives in sessions, artificial intelligence was a constant topic throughout the show. Many noted that the technology had gone beyond hype to include practical use cases and game-changing opportunities in areas such as personalization, shopper behavior, sales and service, training and talent development, operations and more.

Hal Lawton, Tractor Supply Company president and CEO, compared the buzz to the start of ecommerce; it’s full of wonder, opportunity — and questions. This time around, however, there appears to be “much more certainty.” He shared how his company is incorporating generative AI in a number of ways, from monitoring the movements of a customer outside looking at a lawnmower and alerting a team member to providing information to help with customer service.

Ulta Beauty is using generative AI-powered tools to create personalized digital experiences and deeper level of customer service for shoppers. That said, the aim is to highlight and complement the human experience rather than replace it, says CEO Dave Kimbell.

Anshu Bhardwaj, senior vice president and chief operating officer, Walmart Global Technology and Walmart Commerce Technologies, likes to think of the technology as making her people-led, tech-powered company’s workers “superhuman.” “I’m a mom,” she told the crowd during one session. “I don’t think anything can replace a mom. It’s the same thing with store workers.”

Marc Benioff, Salesforce chair, CEO and co-founder, took things a step further: “If AI is not making us better, and augmenting us,” he says, “we’ve lost the plot.”

Innovation Lab, Foodservice Innovation Zone highlight advances

For the past seven years, NRF, with support from Tusk Strategies, has worked to identify the top technologies transforming retail across the product and shipping journeys for the Innovation Lab. This includes new-to-market and best in class, in areas from sourcing and supply chain to loyalty and operations. AI runs throughout.

This year, there were nearly twice as many AI-related companies represented as in 2023. Onebeat, for example, provides AI-driven retail inventory solutions. Ikigai Labs provides generative AI for tabular data. Zenlytic is an AI-powered business intelligence tool; OfferFit uses AI to identify the right messages and incentives for every customer; and Booth.AI uses generative AI to meet the demands of hyper-personalized photographic content.

Seth Webb, Tusk Strategies executive VP, attributes the recent growth to increases in use cases and utility. “That is spurring increased investment, which is driving new companies, and more companies, and more use cases,” he says.

AI used to be more focused on preferences or marketing. Today, however, “it is really being used all the way through the shopping journey. We’re just seeing applications grow across the whole retail operation.” 

Rob Grimes is founder and CEO of the International Food and Beverage Technology Association, NRF’s concept partner of the inaugural Foodservice Innovation Zone at the 2024 show. In the Foodservice Innovation Zone, vendors demonstrated the use of AI in security, drive-thrus, embedded equipment for health, temperature and utility monitoring, and customer service.

The area included life-sized holograms of Grimes, NRF President and CEO Matthew Shay, and PepsiCo Foods North America CEO Steven Williams, each responding to attendee questions and talking about their organizations with the help of AI provided by Conversa.ai.

“The reason it’s there isn’t just to say, ‘Oh wow, that’s cool,’” says Grimes. “It’s actually about delivering customer service that way, and getting some personality back into the conversation.”

The hope is that the Foodservice Innovation Zone showed applicable, useful solutions. The drive-thru area, for example, included LetzChat, an AI-driven tool that provides real-time translation into more than 100 languages; it was demonstrated on a menu board as well as ordering kiosks. There were also computer-vision vending machines to help create frictionless experiences, and the ability to provide made-to-order hamburgers and hot dogs served on toasted buns with cheese, ketchup and mustard.

Curated tours of the Expo included the inaugural AI Retail Playbook, created with retailer feedback and the most popular Expo Tour at this year’s show, says Dan Hodges, founder and CEO of Consumers in Motion Group. The two-hour tours are expert-led, efficient, curated and focused on “market-leading technologies in customer management, including utilizing AI for personalization, operations, training and talent development, seamless integration of the physical and digital customer journey, and utilizing ChatGPT.” 

Hodges noted after the show that attendees were particularly interested in AI case studies. “People want to be more aware of the possibilities,” he says. They also enjoy learning from each other and networking with other leaders who have already solved the issues they’ve faced. 

Policy and governance still required

Christian Beckner, NRF vice president, retail technology and cybersecurity, got a laugh during one session by noting that AI had been “woefully neglected” on the show agenda this year. The overflow crowd spoke otherwise, highlighting the level of interest.

The retail sector is an “active user” of AI products and services; there are dozens of use cases applicable to retailers of all sizes; “and the new focus on generative AI over the past year has really increased the attention to these issues,” Beckner says. Policymakers are paying increasing attention, and consumers still have a bit of uncertainty, creating the need for a robust dialogue within the industry on AI issues.

NRF started an AI Working Group for AI business and policy leaders at its retail member companies last year. In addition, through its new Center for Digital Risk & Innovation, it has recently released a set of principles for use of AI within retail. The effort focuses on four areas: issues related to governance and risk management; issues related to customer engagement and trust; applications that relate to a company’s own workforce; and business partner accountability.

The key message, Beckner says, is to be proactive in encouraging and supporting responsible adoption and use of AI. This includes benchmarking and best practices, in addition to ensuring the retail sector has a voice in state and federal legislation being developed. The aim is that proposed legislation wouldn’t inappropriately inhibit innovation. At the same time, NRF and its retailers are aware that there are risks; there’s a need for balance.

Overall, Beckner says, he sees a lot of different use cases for AI.

“Clearly, we don’t think it’s hype,” he says. Companies are at various levels of maturity, but “we do think there’s legitimate business value. This is something that will make businesses stronger.”

Retailers are still in test-and-learn mode, he says, but retailers that completely ignore it run the risk of losing opportunities for increasing efficiency, improving customer service and seeing other benefits. In addition, the landscape is quickly changing, and technologies continue to evolve. It’s critical that retailers are aware and engaged, he says, and even if not radically changing operations or IT infrastructure, that they’re at least thinking through appropriate opportunities.

AI doesn’t change the fact that retailers still want to have trust-based relationships with customers; this is not about shifting the core value proposition. It’s more about doing things more efficiently.

“It really is an issue that needs to be part of corporate strategy,” he says, perhaps involving legal, digital, marketing, operations and other teams. “It’s a cross-cutting issue that is fundamentally changing the nature of the way retailers work.”