Avanade, a global expert in the Microsoft ecosystem, unveiled game-changing retail AI innovations at the National Retail Federation (NRF) 2024 event in New York last weekend. The firm also revealed the results of a study indicating that nearly 90% of retailers believe their customers are ready for AI-driven experiences and operations. However, most of these retailers face the challenge of implementing strategic measures to support front-line workers and drive meaningful insights from AI.
In its AI Readiness Report, Avanade indicated that 98% of retail and consumer packaged goods organisations globally believe AI could drive up to 20% annual revenue growth over the next 18 to 24 months. However, the report also warned of the risk of leaving money on the table due to a lack of preparedness for the AI-first era.
While Microsoft's new retail AI solutions are expected to address many industry challenges, Avanade's study highlighted significant hurdles to AI adoption in retail, particularly the lack of responsible AI guidelines and insufficient employee training. Nearly 90% of retailers acknowledged the transformative potential of their data when used with AI, making data and analytics platforms their top investment priority for 2024.
New AI solutions from Microsoft were warmly welcomed by retailers at the event, setting a new benchmark for industry-specific generative AI and data capabilities. These include a Copilot template for store operations and personalised shopping, both on Azure OpenAI Service and retail data solutions in Microsoft Fabric.
The study also showed that, despite most retailers being confident in their ability to tap into the benefits of AI more quickly than their competitors, only half of them have taken strategic steps to manage human resources, workforce planning and training. This lack of preparation could limit operational efficiency when scaling up the adoption of generative AI technologies. Furthermore, while retailers believe their customers are ready for AI, nearly all industry leaders agreed that significant support and substantial effort would be needed to train employees to use generative AI tools.
Avanade's report also revealed a worrying governance gap, with only half of retailers having implemented a complete set of policies and guidelines to ensure the responsible use of AI. This calls for a robust and scalable governance framework, given the growing concerns among consumers over the use of AI, the responsibility of using AI ethically and the potential repercussions of a misstep.
During the NRF 2024 event, Avanade not only shared these and other AI readiness insights but also showcased an innovative range of AI retail demonstrations that are set to redefine the future of retail. Among the highlights of these demos were generative AI-powered shopping experiences, smart devices and AI video analytics to boost store operations, AI-based solutions for in-store employees, an intelligent AI-infused commerce platform enabling transactions anywhere and a proprietary generative AI retail data platform.
Corine Vives, Global Retail and Consumer Goods Industry Lead at Avanade commented: "With these solutions, Microsoft is offering something genuinely bold and new: AI capabilities that are specifically built to address precise industry pain points. If retailers believe customers are demanding AI, they have no choice but to deliver it, or shoppers will go elsewhere. However, our research shows a significant gap in the readiness of retailers. The path to readiness will require concerted efforts from retailers."
Corinna Reeves, Regional Products Industry Lead and Integrated GTM Lead at Avanade Australia added: "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 challenges such as governance gaps, employee training, and evolving customer expectations."