According to a recent study, nearly 98% of global retail and consumer packaged goods (CPG) organisations believe that artificial intelligence (AI) will drive up to 20% annual revenue growth over the next 18 to 24 months. However, the research conducted by Avanade indicates a lack of preparedness among these organisations, potentially risking revenue in the AI-first era.

Avanade, a leading digital innovator, showcased retail AI innovation at the recent National Retail Federation (NRF) Big Show in New York. The company highlighted the challenges retailers face in the AI race, including the absence of responsible AI guidelines and inadequate employee training.

Avanade's research reveals that almost 90% of retailers believe their customers are ready for AI-driven interactions and processes. Data and analytics platforms are the top investment priority for retailers in 2024. Microsoft's new AI solutions, including Copilot templates for store operations and personalised shopping on Azure OpenAI Service, and retail data solutions in Microsoft Fabric, are seen as a welcome development.

"With these solutions, Microsoft is offering something genuinely bold and new - AI capabilities that are specifically built to address precise industry pain points," says Corine Vives, Avanade's Global Retail and Consumer Goods Industry Lead.

However, the readiness of retailers to harness the benefits of AI is questionable. Avanade's AI Readiness Report reveals that 94% of retailers express confidence in their ability to harness AI benefits faster than their competitors, but only half have implemented strategic measures for managing human resources, workforce planning, and training. Only half of the retailers report having implemented a complete set of guidelines and policies to ensure the responsible use of AI.

"If retailers believe customers are demanding AI, they have no choice but to deliver it, or shoppers will go elsewhere. It's not a nice-to-have. Overnight, expectations and experiences of customers have changed, and retailers must keep up. However, our research shows a significant gap in the readiness of retailers. While they might be confident about how prepared they are, our data highlights big obstacles to overcome. The path to readiness will require concerted efforts from retailers," adds Vives.

Corinna Reeves, Regional Products Industry Lead and Integrated GTM Lead, Avanade Australia, believes that AI holds transformative potential for Australian retailers. "AI holds transformative potential for Australian retailers, including the opportunity to maximise the power of AI to deliver exceptional customer experiences and drive business growth. Strengthening their AI capabilities will also help retailers address key barriers such as governance gaps, employee training, and evolving customer expectations. With the help of the bold and innovative stack of AI solutions from Microsoft, Australian businesses can unlock a competitive advantage in enhancing the Aussie shopping experience," says Reeves.

In conclusion, while AI holds immense potential for the retail industry, the readiness of retailers to harness its benefits remains a significant challenge. The journey towards AI readiness will require a concerted effort from retailers, including addressing governance gaps, employee training, and evolving customer expectations.