As artificial intelligence capabilities continue to expand, retailers have shown a greater reliance on the technology for logistics, demand forecasting, trend conceptualization, market intelligence, personalized marketing, virtual try-on and a slew of other use cases.
Data from Aptean shows that 38 percent of fashion and apparel brands already use artificial intelligence, and an additional 27 percent described implementation as a work in progress.
With over half of the industry keeping a close eye on AI, responsible usage could be paramount to data protection, consumer trust and brand reputation.
Related Stories
Deloitte recently released data that shows only 33 percent of retail executives said they fully understood generative AI’s potential implications for their businesses, even as 98 percent of retail executives said they had some familiarity with the technology.
But per Zion Market Research, the global market for AI, which stood at about $60 billion in 2021, could top $422 billion by 2028. That expansion could force laggards to quickly learn about AI’s use cases.
In that process, though, considerations for ethics and best practices will remain important. The National Retail Federation (NRF) released four guidelines for responsible AI usage this week, not long after President Biden’s Oct. 30 executive order detailing guardrails for safe, trustworthy AI.
Those suggestions include stronger governance and risk management around the emerging technology; fostering customer engagement and trust through transparency; oversight of workforce-related usage of AI and holding business partners accountable for their independent AI usage.
NRF staff developed the original recommendations with input from the organization‘s AI working group, which includes representatives from over 100 retailers.
Already, consumers have balked against companies’ use of AI. The Deloitte research indicates that 79 percent of consumers said they have “little to no” trust in retailers’ ability to use AI responsibly in their operations.
Christian Beckner, NRF’s vice president of retail technology and cybersecurity, said consumers’ lack of trust in AI extends to most industries, but retail’s personalized consumer touch points make fostering trust even more salient.
“There’s just a general lack of understanding [around] what is [AI], really? What are you deciding for me? Who is deciding this? Can I really trust this?” he said. “Retailers [are] having day-to-day interactions with consumers every day, in many cases from existing places of trust. I think they have particular interest in making sure that their use of AI maintains that trust… and hopefully improves that trust.”
But as brands figure out a way to clue consumers in on their use of AI, not everything will have to be disclosed, he added.
“The consumer doesn’t care if you’re using AI to make your supply chain more efficient,” he said.
Per Beckner, consumer concerns lie closer to decisions that directly affect them and their ability to interact with a brand.
Beckner said relationships could prove vital from multiple lenses. Because so many brands rely on startups and third-party partners for AI solutions and technologies, leaders will need to ensure that their external partners share similar principles around acceptable data uses and customer engagement.
Despite the influx of technology, strong governance is a pillar of many retail organizations, and leaders can leverage existing structures to inform their decisions around AI, Beckner said.
“You’re not trying to create something new, really, but you have an existing governance [process], … compliance process and risk management process. Make this part of that,” he told Sourcing Journal.
Beckner said the NRF will release more guidelines to retailers next year related to specific retail use cases for AI, as well as governance framework.
He said it will also work to engage in policy discussions around AI.
“We think that there needs to be a greater voice in this policy debate for the sectors that are large users of AI products, and in many cases are at the direct touch point for the general public’s engagement with AI,” Beckner said. “I think it’s ultimately likely that many more Americans are going to have experienced generative AI in practice through going on an e-commerce website than actually [creating] an account on a [ChatGPT-like] site and playing around with it.”
