Artificial Intelligence
How Consumers Feel About AI in Retail and CX
4
Mins Read
May 11, 2022

In movies like Ex Machina, Terminator and the Matrix series, AI might be seen as something to be wary of. However, consumers and business decision-makers are responding increasingly positively to AI lately, especially in how it can help the retail experience and overall customer experience.

How Consumers & Companies Feel About AI in Retail

Consumer's Report

According to EMarketer's Retail Report summary and stats from botco.ai, 60% of U.S. Customers feel somewhat or extremely positive about AI and automated chat technologies. An even larger percentage (83.1%) say that AR or VR would be an additional benefit to their shopping experience. Consumers may not be aware that AR/VR uses multiple types of AI such as image recognition, language processing and understanding, and predictive analytics.

Some retailers are already using AI-enabled chatbots to improve customer service. Sephora allows customers to use a chatbot on their website to find product recommendations, check inventory and even place orders. And H&M's new virtual stylist chatbot can help shoppers find the perfect outfit by asking questions about their style, budget and what occasion they're shopping for.

In summary:

  • 58% of consumers prefer product recommendations based on past browsing
  • 43% want auto-replenishment recommendations
  • 58% say personalized recommendations are somewhat accurate within AI-based email marketing
  • 53% of consumers surveyed

As the use of AI in retail becomes more widespread, we can expect to see even more innovative applications that make the shopping experience more convenient, personal, and fun.

Companies & Decision Markers

A total of 61% of retail/eCommerce companies say that AI helps them with efficiency and productivity with the largest percentage of AI use being to increase the speed of time to market.  

Other popular applications for AI in retail are:

  • Price optimization
  • Dynamic pricing
  • Sentiment analysis
  • Product recommendations
  • Customer segmentation

According to Getting Personal: Consumer Perspectives on AI in Marketing and Customer Service, a study released by CDP.com, 37% of consumers like AI and find it helpful, but that number rises to 58% among people who use AI tools for work or are familiar with them.

Consumer's Perception of Artificial Intelligence in Marketing

In an academic study by University of Florida College of Journalism and Communications scholars on Consumers Perception of Artificial Intelligence, consumers are typically unable to clarify nuances between AI and related topics such as deep learning, natural language processing, and other AI-related terms. They are also confused or conflicted when AI is portrayed or communicated as functional versus emotional. For example, Consumers love voice to text or voice-assisted search aspects, but are more cautious in forms of AI that can respond in a human-like manor. Sort of similar to the "uncanny valley" principal.

The uncanny valley is a hypothesis in the field of human aesthetics which holds that when human features look and move almost, but not perfectly, like natural human beings, it causes a response of revulsion among some observers. The "valley" refers to the dip in a graph of the comfort level of humans as subjects increase in their similarity, but never reach it - like in The Polar Express.

The study found by UFC found that consumers are more likely to be comfortable with AI when it is used as a tool or an assistant rather than when it interacts with humans on an emotional level.

In general, 43% of consumers feel that AI is helpful depending on the company and only 19% prefer AI be used at all.

A Marketer's View on AI in Marketing

Overall, AI can be very beneficial to marketing efforts. It can help with things like customer segmentation, targeted content, and even automated campaigns. In GroupM's recent report on AI Advertising, they suggested that AI-enabled ad spend is projected to equate to $1.3 trillion by 2032, and reaching 90% of total ad spend from $320 billion spent this year.

Largely, 81% of employees said that AI supports their careers better than humans and 90% of people who work with AI said that they either like AI or like it depending on the company using it.

In 2021, the estimated worth of the AI industry was $21.9 billion. Growth projections predict that the artificial intelligence market size will grow 40.2% CAGR by 2028. Approximately 80% of retail executives expect to adopt AI by 2025.

How CatapultX Sees AI Affecting Consumers & Retail

CatapultX focuses on utilizing AI to understand video content and serving related advertising in real-time, this can include product recommendations. By creating an experience where videos can become inherently shoppable, the retail experience can be expanded into video, where 82% of internet traffic is directed anyway.

In addition, we also think that AI can help improve the advertising customer service experience by providing more personalized recommendations, detecting irregularities such as fraudulent behavior, and even handling  customer service inquiries.

We believe that as the technology progresses, AI will become more and more commonplace in retail. For now, it is still in its early stages but has great potential to help improve the shopping and advertising experience for both consumers, retailers, and marketers alike.

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