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GenAI in retail: Transforming consumer experiences and business efficiency
In episode six of our Generative AI (GenAI) series, we delve into the transformative impact of AI on the Indian consumer products and retail industry. The EY Consumer Index survey reveals that a staggering 82% of Indian consumers are embracing AI, surpassing global trends. Join us as we explore how AI is revolutionizing shopping experiences, influencing decision-making processes, and providing valuable insights into logistics and supply chain management, with Angshuman Bhattacharya, EY India Partner and National Leader in Consumer Products & Retail. Let us deep dive into understanding the symbiotic relationship between AI and customer satisfaction.
GenAI is shaping shopping experiences with personalized recommendations, chatbots, and visual searches, enhancing experiences and driving loyalty.
82% of Indian consumers embrace AI, gaining confidence through accuracy, personalization success, and transparency in decision-making processes.
GenAI can benefit consumer companies as it helps in optimizing logistics and supply chain management, creating opportunities for cost-saving and increased efficiency.
AI's precision in personalization and transparency in decision-making fosters customer trust, revolutionizing shopping experiences and enhancing business efficiencies.
For your convenience, a full-text transcript of this podcast is also available.
Pallavi: Welcome to EY India Insights Podcast. I am your host, Pallavi. In our latest episode of the Generative AI (GenAI) series, we unravel the dynamic relationship between the Indian consumer product companies and Artificial Intelligence (AI). The EY Consumer Index survey reveals that an astonishing 82% of Indian consumers are embracing AI with enthusiasm, surpassing global trends.
Join us as we explore the profound impact of AI - from personalized shopping experience to efficient supply chain management. To guide us through this transformative era, we are honored to have Angshuman Bhattacharya, EY Partner and National Leader of Consumer Products & Retail in India, who has over two decades of experience in the sector. Angshuman, thank you for joining us and welcome to this episode.
Angshuman: Thank you, Pallavi. It is indeed a transformative time and would love to answer your questions.
Pallavi: I would like to ask about the consumer adoption of AI in India. As you know, our survey indicates that an impressive 82% of Indian consumers are embracing AI. How are they utilizing AI to enhance their shopping experience? And what are some of the key decision-making processes that AI is influencing?
Angshuman: It is an interesting statistic that 82% of Indian consumers are embracing AI. In India, the integration of AI in shopping experiences can be really transformative. Several key areas showcase how consumers are leveraging AI to enhance their shopping journeys:
1). Personalized recommendations: Al algorithms today analyze past purchases, your entire browsing behavior, and preferences to offer tailored product recommendations. Consumers appreciate this customization, which helps them discover relevant products efficiently.
2). Chatbots: Today, AI-powered chatbots assist customers in real-time, answering their queries, providing requisite product information, and even going all the way in facilitating purchases. This 24/7 availability of service personnel in the form of AI chatbots actually enhances customer service and supports purchasing decisions.
3). Visual search and virtual try-ons: The third area in which we see a lot of traction is the visual search and virtual try-ons, especially in fashion, lifestyle, and jewelry. AI-driven visual search tools today enable users to find products by just uploading images or using their device's camera. Additionally, virtual try-on features for clothing, accessories, jewelry, and footwear allow customers to visualize how these products might look on them before buying, thereby improving the whole confidence in online as well as offline purchase decisions.
4). Supply chain optimization: AI can help retailers manage inventory more effectively, ensuring that products are available when and where they are needed. This optimization streamlines the shopping experience by reducing the possibility of stock outs and enhancing overall product availability on shelf. That is a very important point in supply chain, especially given that fashion and lifestyle businesses often face stock out situations. This directly translates into revenue enhancement or sales growth.
5). Predictive analytics for pricing and discounts: Pricing has always been an opaque aspect of consumer products because the point of sale has been extremely fragmented. Today, AI-powered analytics predict consumer behavior, much like their choices, enabling retailers to offer dynamic pricing and very targeted discounts.
This strategy influences consumers’ decisions by presenting personalized offers that align with their preferences and at the same time helps in net revenue management or improved realizations for the retailers.
6). Voice commerce: Today, voice assistants powered by GenAI such as Amazon's Alexa or Google Assistant facilitate voice-based shopping experiences. This adds a little more personalization to the shopping experience. Consumers can browse, select, and purchase products using voice commands, simplifying the entire shopping process.
7). Fraud detection and security: This is something that is foremost in the consumer's mind, especially when shopping online. AI algorithms are able to work behind the scenes to detect and prevent fraudulent transactions, providing consumers with a secure shopping environment, thereby influencing confidence in online purchases.
These are a few of the applications of GenAI, and there is a lot of demand coming up in some of these areas. Over the next few years, all of these areas would be significant and important use cases for GenAI.
Pallavi: Thank you, Angshuman, for those invaluable insights. As you said, a personalized recommendation seems to be playing a pivotal role. Could you elaborate on how AI is shaping customer decisions as highlighted in EY Consumer Index survey? And what impact does this have on customer satisfaction and loyalty?
Angshuman: Personalization as a trend has caught on in global markets and today is catching on in a big way in the Indian market as well. But what AI is able to do in terms of precision around personalization is completely pathbreaking. AI’s ability to analyze vast amounts of data and that too very quickly, in a real-time environment, allows and enables hyper personalized experiences. By understanding individual preferences, purchase history, and behavior, AI tailors product recommendations and marketing messages as well. This precision resonates well with consumers, positively impacting their purchase decisions.
The other aspect of personalization is enhanced customer service, which comprises the chatbots and the virtual assistants, which provide instant support, almost like a closed loop interaction, answering queries and guiding customers through their shopping journey. Fast and accurate assistance significantly influences customer decisions, especially when it comes to complex purchases or even resolution of issues that the consumer may be facing.
The third area is that of predictive analytics or anticipatory insights. AI’s predictive analytics forecasts consumer needs and trends by preemptively suggesting products or services before customers realize that they even need them. It is almost like addressing a latent gap. AI is able to shape their decisions by presenting relevant options at the right moment. Add to it the convenience and accessibility that voice commerce, visual search, seamless user interfaces that AI provides - the overall shopping process gets significantly simplified, and that drives not only a seamless buying experience, but also customer loyalty.
Finally, the most important is the trust through security and transparency. AI aids in detecting and preventing fraud, ensuring secure transactions. That would be the closing remark in terms of, you know, how personalization can work in terms of creating a secure and a very interesting buying environment which is catered to personal requirements, needs and behaviors, which effectively add to customer satisfaction and loyalty.
Therefore, the impact of these AI-driven influences on customer satisfaction and loyalty is pretty significant.
Pallavi: It is fascinating to see the symbiotic relation between AI and customer satisfaction. Our survey also reveals that 82% of Indian participants are open to improving their purchase decisions using AI. What factors contribute to this high level of confidence and how does it compare globally?
Angshuman: 82% is a very significant number, and unlike many other technologies, GenAI is also being adopted simultaneously across the globe, as in India or parts of Southeast Asia, Middle East, and some of the developed markets in Europe and the US. So, India is right up there in terms of the overall interest in AI and the confidence in terms of AI being able to help them in purchase decisions. But it is a journey.
Consumers are gradually gaining confidence for several reasons. One is improved accuracy. One must remember that AI is based on learning, and as AI algorithms evolve, their accuracy in predicting preferences, behavior increases. When consumers consistently see AI make relevant and helpful suggestions, they gain trust in its decision-making capabilities.
The second part of it is the personalization success. We spoke about personalization, but when this really starts playing out, thanks to the evolution of the algorithms, consumers would definitely feel greater confidence in terms of what AI could do in helping them in really personalizing what they are buying to their tastes and preferences.
The third part is transparency and explanation. Consumers are used to the offline world, where you would have a salesperson or a shopkeeper explaining to them the various functions, benefits, features, pros, and cons of the purchase. With the transparency and explanation functionality that AI is able to now bring, it is becoming a quasi or a proxy for a real-life interaction. As that evolves, there will be more confidence that builds in AI as an assistant.
Overall, with positive experiences, increasing adoption and validation, and as more consumers try AI-based purchases and have great experiences – all these will help foster trust in AI.
Pallavi: Impressive examples, indeed. Looking at the broader picture, how does AI benefit consumer companies in terms of providing valuable insights into logistics and supply chain management? Could you share any specific industry use cases, highlighting cost savings and operational efficiencies?
Angshuman: There are multiple areas which are at play, but I must just caveat here that the journey has just begun. There is a lot of interest from companies, but at the same time, the use cases are far too many and that as an advisor to many of these companies, it is our role also to make sure that we are able to help some of these companies and decision makers in narrowing down on what are the beneficial use cases. What we are seeing right now is that there are developing use cases in the areas of customer experience, marketing efficiency, manufacturing, and supply chain intelligent interventions.
These are the two or three areas where we are seeing the maximum interest. Administrative areas like contract management, document management and a host of other administrative workstreams are getting replaced by GenAI, which could lead to significant savings in terms of the full-time employees (FTEs) that are deployed, who could eventually move on to do more value-added tasks.
So, the power is infinite, and we expect to see a significant transformation in business models driven by GenAI. But there are two buckets. The first bucket is where you are able to further the business objectives in the area of customer experience, marketing efficiency and supply chain, which is one stream of application that many consumer companies are evaluating.
The other is in the area of reducing the redundancy and the inefficiency in administrative functions, which is the area of contract and document management, where there are a lot of use cases and hefty savings. So, these are both parallel streams and over the next few years, we see a lot of intelligent interventions led by GenAI to come into some of these consumer companies and make them realize business objectives better.
Pallavi: Thank you, Angshuman, for those invaluable insights and for joining us today and letting us know how GenAI is influencing the consumer products and retail industry.
Angshuman: Thank you.
Pallavi: If you enjoyed this episode, please do not forget to subscribe, and stay tuned for more discussions of leaders, trends, and innovations shaping the consumer landscape. Until next time, I am signing off.
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