Generative AI Set to Propel Amazon and Walmart in $1.5 Trillion Retail Transformation

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Generative AI: Propelling Amazon and Walmart in the $1.5 Trillion Retail Transformation

Generative AI, a powerful technology rooted in machine learning, is set to revolutionize the retail industry and create new revenue streams for leading retailers. According to the Retail AI Readiness Index released by the IHL Group, generative AI has the potential to drive over $1.5 trillion in additional financial impact through 2029 for the top 212 North American public retailers and restaurants. Notably, retail giants Amazon and Walmart are expected to account for a significant portion of this windfall, with a combined share of more than $580 billion, representing 38.5% of the total forecasted impact.

At its core, generative AI leverages machine learning algorithms to generate new and unique content such as conversations, stories, images, videos, and music. This technology goes beyond the traditional AI/ML improvements currently used in the retail market, acting as a catalyst for exponential financial growth. It is a culmination of a company’s preparedness to adopt the advancements in generative AI, including data readiness, infrastructure scalabilty, and available investment capital. When combined with the foundational work accomplished in cleaning, tagging, and managing customer, inventory, and product data, generative AI propels retailers towards unprecedented growth opportunities.

The Retail AI Readiness Index not only offers an AI readiness score for individual companies but also provides insights into the potential financial impact through sales growth, gross margin improvement, and sales/general administrative cost reduction. The index’s research covers various retail segments, ranking the top seven companies in Fast Moving Consumer Goods, Apparel/Shoes, Hard Goods, Health and Beauty, Restaurant Chains, and Pure Play E-commerce.

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Furthermore, a recent forecast from the IHL Group predicts that generative AI will have a staggering $9 trillion impact on the retail industry. Although it currently represents only 9% of the overall financial impact, generative AI is projected to account for 78% of the total impact by 2029, reaching a colossal $4.4 trillion. The benefits of generative AI will stem from increased sales (51%), improved gross margins (20%), and lowered selling and administrative costs (29%). As a result, retailers embracing this transformative technology can expect substantial returns on their investments.

The forecast also reveals that over the next decade, 47% of cumulative AI impact will come from traditional AI/ML technologies in closed systems, while generative AI functions will contribute to 48% of that impact. Additionally, 5% is projected to come from artificial general intelligence tools, which are expected to become available later in the decade.

Generative AI holds the key to unlocking unprecedented growth and profitability for retailers. By harnessing its capabilities, companies can create unique and engaging content that resonates with customers, leading to increased sales and improved gross margins. Furthermore, by leveraging generative AI’s ability to streamline operational processes and reduce costs, retailers can optimize their business efficiency and profitability.

As the retail industry continues to evolve, it is crucial for companies to recognize the immense potential of generative AI and invest in building their AI readiness. Retailers that embrace this technology and leverage its transformative power will be well-positioned to thrive in the rapidly changing landscape, securing their place among the industry leaders. With Amazon and Walmart leading the way, generative AI is set to reshape the future of retail, pushing the sector towards unprecedented heights of success and innovation.

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Frequently Asked Questions (FAQs) Related to the Above News

What is generative AI?

Generative AI is a powerful technology rooted in machine learning that uses algorithms to generate new and unique content such as conversations, stories, images, videos, and music.

How does generative AI differ from traditional AI/ML improvements in the retail market?

Generative AI goes beyond traditional AI/ML improvements by acting as a catalyst for exponential financial growth in the retail market. It enables retailers to tap into new revenue streams and creates opportunities for unprecedented growth.

How does generative AI impact the retail industry financially?

According to the Retail AI Readiness Index, generative AI has the potential to drive over $1.5 trillion in additional financial impact through 2029 for the top 212 North American public retailers and restaurants. Companies like Amazon and Walmart are expected to account for a significant portion of this windfall, representing 38.5% of the total forecasted impact.

What factors contribute to a company's readiness to adopt generative AI?

Companies need to focus on factors such as data readiness, infrastructure scalability, and available investment capital to be prepared to adopt the advancements in generative AI. It is also essential to have a strong foundation in cleaning, tagging, and managing customer, inventory, and product data.

How does the Retail AI Readiness Index help retailers?

The Retail AI Readiness Index offers insights into AI readiness for individual companies and provides information on potential financial impact through sales growth, gross margin improvement, and sales/general administrative cost reduction. It covers various retail segments, allowing companies to benchmark their AI readiness against industry leaders.

What is the projected impact of generative AI on the retail industry in the next decade?

The IHL Group forecasts that generative AI will have a staggering $9 trillion impact on the retail industry. It is projected to account for 78% of the total impact by 2029, reaching $4.4 trillion. The benefits will come from increased sales, improved gross margins, and cost reduction.

How does generative AI compare to traditional AI/ML technologies?

Over the next decade, traditional AI/ML technologies in closed systems are expected to contribute 47% of the cumulative AI impact, while generative AI functions will account for 48%. Artificial general intelligence tools, expected to become available later in the decade, are projected to contribute 5% of the impact.

How can generative AI benefit retailers?

Generative AI can help retailers create unique and engaging content that resonates with customers, leading to increased sales and improved gross margins. It can also streamline operational processes and reduce costs, optimizing business efficiency and profitability.

How can retailers leverage generative AI to thrive in a rapidly changing landscape?

By recognizing the potential of generative AI, investing in building their AI readiness, and embracing this transformative technology, retailers can position themselves to thrive in the rapidly changing landscape. This will secure their place among the industry leaders and drive success and innovation.

Are Amazon and Walmart leading the way in adopting generative AI?

Yes, Amazon and Walmart are expected to account for a significant portion of the financial impact generated by generative AI. Together, they are projected to have a combined share of more than $580 billion, representing 38.5% of the total forecasted impact.

Please note that the FAQs provided on this page are based on the news article published. While we strive to provide accurate and up-to-date information, it is always recommended to consult relevant authorities or professionals before making any decisions or taking action based on the FAQs or the news article.

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