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Retail cos leveraging AI to grow revenue, shifting focus to customer experience, front-end | Nasscom Interview

70 per cent of the companies surveyed by NASSCOM said that they focus on revenue growth leveraging AI and thus are also increasing their AI spends.

Retail cos leveraging AI to grow revenue, shifting focus to customer experience, front-end | Nasscom Interview
Madhav Bissa, Program Director – Data Science & Artificial Intelligence, NASSCOM.

The retail industry is witnessing a steady adoption of cloud, AI and related technologies, and is now one of the top sectors in terms of growth in digital transformation. In fact, 70 per cent of the companies surveyed by NASSCOM said that they focus on revenue growth leveraging AI and thus are also increasing their AI spends. “As retail firms in India assess, test and scale-up their AI spend, significant upfront effort may yield greater than desired results for the future of AI within their firms,” Madhav Bissa, Program Director – Data Science & Artificial Intelligence, NASSCOM, told FinancialExpress.com.

The retail sector is also witnessing a shift in focus of solutions from back-end operations to more front-end value chain of retail such as customer experience, retention, recommendation engine, etc. The recent demand by retail brands of today is more technology providers who offer a full stack capability, bringing ‘infrastructure, data, intelligence and applications together to provide seamless operations across businesses’. Madhav Bissa talked about the growing relevance of technology and integration of AI in various aspects of the retail industry. Here are edited excerpts from the interview.

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How is the Indian retail sector evolving and growing over the years? How has it coped from the two years of pandemic?

The Indian retail industry is one of the fastest growing sectors in the world and accounts for 10 per cent of the country’s GDP. The sector has undergone massive change over the years and is experiencing a steady growth, not just in major cities and metros, but also in tier-II and -III cities. From brick and mortar to online and from unorganised standalone shops to organised chains, the retail sector has evolved owing to its focus on digital transformation. The sector is expected to reach a market size of $1.4 trillion by 2024.

In FY’22, driven by pent-up demand and the surge in economic activity, the sector performed exceptionally well to reach 90 per cent of the pre-Covid sales level quickly, which was one of the fastest recoveries witnessed in the Indian business ecosystem. In FY 2022-23, the retail industry is expected to outperform pre-pandemic levels of revenue and earnings. From a technology perspective, the sector witnessed a steady adoption of cloud, AI and related technologies, making it one of the top sectors in terms of growth in digital adaptation. The industry is continuously implementing functional level AI strategy. The core of current AI initiatives in the retail sector includes innovation in addition to expansion and optimization.

How has AI & cloud changed the customer experience and increased sales and revenue in India? How are retail brands adjusting to this change?

Evolving consumer preferences, rapid changes in shopping behaviours and supply chain disruptions, have made retailers focus more on deploying AI & Cloud-first strategies to drive business growth and gain sustainable competitive advantage. The ability of AI to process massive amounts of data to make decisions quickly and accurately has benefitted the organisations tremendously. As retailers strive to become more agile and connected, moving to the cloud has become a critical capability to enable the flexibility and data fluidity that these organisations desire. To successfully derive value from AI & Cloud deployment, data standardisation is a must. 61 per cent of the organisations surveyed said that they have standardised data at the BU/enterprise level. This has enabled the organisations to deliver better performance and better experience to its customers, and thus has demonstrated the importance of data standardisation within the industry.

Is it favourable for established brands to create internal AI labs or in-house technology departments or collaboration is a better way to go about it?

While retail enterprises are already on the path of AI adoption, a robust collaboration strategy can help realise the benefits offered by AI to the optimum level. By collaborating with AI providers, retail enterprises can benefit from their technical capabilities, leverage available platforms/ solutions, adapt to new ways of working and create strong proficiency with emerging technologies. Best-in-class companies realise early in their AI journey that it would be impossible to do everything within the framework of the organisation. Organisations are actively having open dialogues with technology providers, academia and start-ups to build industry leading AI capabilities. Having said that, as per NASSCOM AI Adoption Index in the retail sector, it has been observed that over 67 per cent of experienced firms focus on specialist AI capability building inhouse, while over 80 per cent start-ups rely on outsourcing augmentation.

How is AI impacting the future of project management in the retail sector?

The retail ecosystem requires a consistent level of experimentation to stay up to date with the ever-changing trends in the country and globally. Project management helps retailers to test their new ideas and further implement the most promising ones. Customer/human behaviour plays a key role in the success or failure of the new concepts. Here, new-age technologies like AI have the ability to help the project management methodology to help these retailers by providing predictive analysis, insightful automation, cost reduction through accurate project estimations, etc. About 46 per cent of retail businesses have said that they have integrated their AI project management methodology at the BU or enterprise level. Additionally, almost all experienced adopters have a well-defined PMO at either of these levels.

What will define the future of the retail industry in the coming years?

New-age technologies like AI, data analytics, machine learning, IoT, etc. have the potential to create more engaging and innovative shopping experiences whether online or offline. For instance, established brands are offering an omnichannel experience to their customers by leveraging algorithms to Engage, Find and Discover. The solution uses and analyses both historically stored data as well as real-time generated data to give an advanced level of customer experience. Such new-age technology also has the potential to help with other business objectives like increasing productivity, sales, and security at the retail stores. Moving forward, with brands jumping onto trends like the metaverse, we can expect the retail sector to tap into this opportunity and further enhance itself.   

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