Generative AI
How Gen AI is Driving Personalization, Efficiency, and Profitability in Retail
The retail sector has evolved and transformed over the years and how! It has moved from traditional brick-and-mortar stores to a highly digitalised landscape driven by e-commerce, omnichannel experiences, and advanced technologies like artificial intelligence (AI) and generative AI (GenAI).
GenAI, a subset of AI, has the capability to understand plain text language used by humans and generate responses in the form of text or images. Its applications in retail are vast, helping the sector not just in the area of Customer Experience (CX) but also in improving operational efficiencies and providing personalised shopping experiences.
Let’s look at some of the key areas where this revolutionary technology is making its mark and adding immense value to the ecosystem.
Procurement – The procurement process in retail is undergoing a significant shift with the integration of GenAI-powered chatbots. These chatbots are primarily deployed to enhance customer service during the procurement journey by automating repetitive tasks like answering basic questions, providing product information, handling order status checks, and offering personalised recommendations.
Take the case of Carrefour, a French retail group that operates hypermarkets, supermarkets, and convenience stores in many countries. Carrefour launched Hopla, a GenAI based chatbot which was integrated into the Carrefour website in the year 2023. Customers were able to use the natural-language AI to help them with their daily shopping, in choosing products for their basket, based on their budget, food constraints and menu ideas.
While the abilities of GenAI-powered chatbots are well known, GenAI capabilities extend much beyond chatbots.
Automated content generation – Creating product summaries that resonated with the target audience and content for marketing communication used to be a time-consuming and labour-intensive task for most retailers with all the manual effort involved.
Not anymore.
GenAI simplifies this process by creating compelling product summaries in a jiffy making it much easier to list new products. Even finalising ad campaigns, email marketing and customer outreach has become quicker with GenAI driven tools tailoring their messaging for individual customers, leading to increased engagement levels and conversion rates.
Retail fraud – Retail fraud and its prevention is another area which is benefitting from GenAI. GenAI with its ability to analyze vast amounts of data can identify anomalies or any kind of suspicious patterns seen in the data that could indicate fraudulent activity. It even generates synthetic data to simulate various types of fraud scenarios. This enriched dataset allows models to train more effectively and anticipate new types of fraud and safeguard retailer profitability.
Inventory Management – One of the biggest areas of struggle for most retailers is managing demand and supply. AI models, with their ability to carry out predictive demand forecasting generate insights into consumer demand and help retailers avoid stock-outs or excess inventory. Aligning inventory levels with demand forecasts reduces costs and maximizes turnover, thus strengthening the inventory control by reducing inventory waste. It can assist and improve the supplier selection process by analysing supplier performance, associated risks, pricing, capabilities, and rankings to help retailers make more informed decisions.
Revenue Optimisation – The proverbial icing on the cake is GenAI’s ability to offer dynamic pricing on items. Dynamic pricing in retail refers to a strategy by stores to continuously adjust the prices of their products based on real-time market conditions such as demand status, inventory levels and competitors’ pricing. For example, if an item is in high demand, the price of the item could be increased (prices for seasonal items like winter coats can be raised during peak demand periods) whereas if the aim is to clear excess stock, the price of the item could be reduced. What’s more – even customer-specific pricing can be generated based on customer behaviour and purchase history. The ultimate aim of dynamic pricing is to maximise sales and revenue potential.
“Retailers who are ahead of the curve when it comes to the application of AI will have learned more from their early experiments and reap the benefits. Those playing catch-up may find themselves continuing to be just that – followers.” - Karina van den Oever, principal, Elixirr
According to McKinsey, GenAI is poised to unlock between $240 billion to $390 billion in economic value for retailers. This is of course hugely significant and could turbocharge retail’s trajectory of growth. It is clear that it is no longer a question of whether but when to adopt GenAI for business in the retail space. Companies need to jump into the fray, move with alacrity, grab the opportunity for transformative change and realise the full potential of this path-breaking technology.
How Infosys BPM can help
GenAI is no longer optional for businesses—it’s a strategic necessity. Infosys BPM, through its GenAI offerings under Infosys Topaz, combines ready-to-use solutions, a robust partner ecosystem, and ethical design frameworks. This empowers businesses to harness AI effectively, enhancing operational efficiency and ensuring responsible innovation for sustainable growth.
