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How generative AI is transforming retail: Key trends and future outlook

Posted by preezie on 21. June 2024


It’s no secret that Generative AI is making waves across various industries, and retail is no exception. This groundbreaking technology is rapidly changing how retailers operate and how consumers shop. From offering personalised shopping experiences to optimising operations for improved inventory management, Generative AI is advancing and achieving things previously unimaginable. 

Now let’s explore the key trends and impacts of Generative AI in the retail sector, supported by the latest insights and data.


Generative AI and its current applications in retail 

Generative AI is becoming a cornerstone for modern retail strategies. 98% of retailers plan to invest in generative AI within the next 18 months 1, and 84% believe it will help their organisation access insights more quickly 2. This rapid adoption is driven by the technology’s ability to boost productivity, enhance customer service, and streamline operations.

Initial uses of generative AI in retail include personalised shopping advisors and adaptive advertising, often utilising off-the-shelf models like GPT-4. 


Key areas for deployment in 2024

Retail leaders have pinpointed five key areas for deploying generative AI to enhance their operations:

1. Customer service automation: AI will streamline interactions and reduce human intervention by summarising conversations, automating tasks, and driving conversions through efficient inquiry resolutions, appointment scheduling, and transaction completions.
2. Marketing support and product descriptions: Generative AI will support product categorisation and create compelling, customer-centric copy.
3. Creative assistance: AI will assist in generating bespoke images and content for campaigns, enabling one-to-one personalisation.
4. Conversational Commerce: AI will enhance shopper interactions with interactive responses beyond simple product recommendations.
5. Store associate support: AI will develop internal knowledge articles from existing data sources, such as product documentation, customer support tickets, and training materials, ensuring well-informed and efficient staff.3

Some retail giants are now moving towards developing custom AI models based on proprietary data for scalable, personalised, and cost-effective results. For instance, Amazon has introduced an AI tool within its mobile app to answer product-related questions by summarising information from reviews and listings. It supports efficient interactions by responding to prompts, describing items, staying on topic, and helping customers make informed decisions quickly.

Meanwhile, other retail merchants aiming to stay ahead of the game are working with various AI models from providers like OpenAI, Azure OpenAI, Claude.ai, and Hugging Face, allowing flexibility in delivering the best AI experience for their customers.


Personalisation at scale 

One of the most significant impacts of generative AI is its ability to highly personalise customer interactions. Retailers like Walmart use AI to refine search functionality and provide tailored recommendations. By understanding the context of customer queries, such as "unicorn-themed toddler birthday party," Walmart's AI generates unique comprehensive results, streamlining the shopping process.5 

Additionally, by integrating AR with generative AI, Walmart offers personalised design assistance for home and apparel shopping, allowing customers to input their budget, theme, and preferences to receive customised recommendations, helping them visualise and design their spaces before making purchases.5

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Optimising retail operations

Generative AI is improving backend operations in retail by enhancing efficiency and accuracy. Alibaba leverages AI-driven market trends analysis to identify and track optimal times for sourcing specific product categories, aiding in informed procurement decisions.6 Additionally, AI automates routine procurement tasks such as creating purchase orders, processing invoices, and tracking payments. This automation reduces errors and streamlines supply chain processes. By integrating generative AI, retailers like Alibaba are setting new standards for operational excellence.

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A future glimpse of generative AI in retail 

By leveraging AI models from various providers and customizing them with their proprietary data, retailers can create highly personalized and engaging customer experiences that truly reflect the brand’s essence, tone, and values. This approach ensures that customers feel deeply appreciated and aligned with the brand's identity and ethos, significantly enhancing their shopping experience and fostering brand loyalty.

Imagine entering a store or browsing an online shop where an AI-powered assistant not only helps you find exactly what you need but also anticipates your unique concerns, suggests complementary products based on your preferences, and even handles your returns seamlessly. This AI assistant engages with you in a conversational manner, making the interaction feel like you're chatting with a knowledgeable friend. 

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Furthermore, these AI systems can offer predictive insights, alerting customers to sales and new arrivals of products they may be interested in before they even start looking. They can also provide detailed product information and reviews, enhancing decision-making and ensuring customers are well-informed. With generative AI, retailers can automate inventory management, forecast demand with high accuracy, and optimise supply chains to ensure that products are always available when and where customers need them.

This forward-thinking application of generative AI leads to a smoother, more enjoyable shopping experience that bridges the gap between physical and digital retail, ultimately transforming the retail landscape into one where every interaction is tailored to meet individual customer needs.



Generative AI is not just a buzzword; it’s a powerful tool reshaping the retail landscape, from personalised interactions to streamlined operations. Its transformative potential promises a shopping experience that is both highly efficient and remarkably personalised. Retailers embracing this technology are poised to lead the pack, delivering superior customer experiences and achieving operational excellence.

Stay tuned as we continue to explore how AI is revolutionising the retail world.



[1]NVIDIA Blog: How Generative AI Is Redefining the Retail Industry - https://blogs.nvidia.com/blog/generative-ai-retail-industry/

[2]Google Cloud, Data and AI Trends Report 2024 - https://cloud.google.com/resources/data-ai-trends-report-2024 

[3]Google Cloud Press Corner: Google Cloud Shares New Research on 2024 Outlook on Generative AI in Retail - https://www.googlecloudpresscorner.com/2024-01-11-Google-Cloud-Shares-New-Research-on-2024-Outlook-on-Generative-AI-in-Retail

[4]PYMNTS.com: ​Walmart and Amazon Get Back to Basics to Elevate Signature Shopping Experiences - https://www.pymnts.com/news/retail/2024/walmart-and-amazon-get-back-to-basics-to-elevate-signature-shopping-experiences/

[5]Walmart: Walmart's Latest Tech-Powered Experiments Aim To Make Shopping Easier and More Convenient - https://corporate.walmart.com/news/2023/10/06/walmarts-latest-tech-powered-experiments-aim-to-make-shopping-easier-and-more-convenient

[6]Alibaba Reads: 6 Innovative Applications of AI in Supply Chain Management - https://reads.alibaba.com/6-innovative-applications-of-ai-in-supply-chain-management/

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