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3 Steps for Retailers to Generate and Capture Value from AI Investments
- Retailers are turning to AI for competitive advantage in an increasingly competitive market. However, many retailers are still struggling to see tangible returns on their AI investments. To create value for customers and capture value for themselves, retailers must approach AI strategically with a three-step process for unlocking value creation and value capture. The first step is to mature data into a strategic asset, as high-quality data is essential for successful AI implementation. The second step is to encourage a culture of experimentation to test and refine AI-driven initiatives that directly benefit customers. The final step is to build out the ecosystem by partnering with technology providers, brands, influencers, content creators, and even other retailers to create new revenue streams and strengthen their market position.
- Retailers must integrate data from various sources, standardize it, ensure accuracy and completeness, and implement robust data governance practices to create a strategic asset. Accurate forecasting is crucial for retailers to optimize inventory levels, reduce waste, and meet customer demand.
- Retailers must run targeted experiments to identify which AI applications truly resonate with their customers and drive loyalty without committing to large-scale implementations prematurely. Collaboration among business and technology stakeholders is necessary as the experiment evolves from concept to reality to help retailers stay agile as market conditions change.
- Retailers can create new revenue streams, enhance their offerings, and strengthen their market position by building out their ecosystem, which could include technology providers, brands, influencers, content creators, and even other retailers. A retailer might collaborate with a computer vision company to create an AI-powered visual search tool to find products. Influencer marketing is another area where AI and ecosystem building intersect. Retailers can use AI to identify and analyze the most effective influencers for their brand.
- Retailers must carefully navigate issues of data privacy, competitive dynamics, and brand alignment to create a cycle in which value created for customers through AI initiatives can be effectively captured and monetized by the retailer and its ecosystem partners.
- A strategic approach to AI implementation allows retailers to move beyond the hype and toward practical, results-driven applications. Skillfully balancing value creation and value capture in AI initiatives turns technological potential into a competitive advantage.
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