As artificial intelligence (AI) continues to reshape industries, the retail sector stands at the forefront of this digital transformation. From hyper-personalized shopping experiences to predictive inventory management, AI is no longer a futuristic concept—it is the driving force behind retail’s next evolution. KPMG’s latest report, Intelligent Retail: A Blueprint for Creating Value through AI-Driven Transformation, highlights this seismic shift, revealing that 83% of retail leaders are confident in AI’s potential to unlock growth and efficiency.
The AI Advantage: A New Era of Smart Retail
Retailers today face an unprecedented convergence of challenges: the relentless rise of e-commerce, the dominance of social commerce, the complexities of omnichannel strategies, and the ever-changing expectations of digital-savvy consumers. To stay ahead, businesses must reimagine their operations by integrating AI into their core strategy.
According to KPMG’s findings, more than 55% of retailers have reported a return on investment (ROI) exceeding 10% from AI-driven initiatives, with 21% seeing gains of over 30%. This success is fueled by AI’s ability to streamline operations—enhancing productivity (33%), driving cost efficiencies (67%), and fostering innovation in products and services (47%).
AI’s Transformative Impact Across Retail
1. Personalized Shopping & Customer Engagement
AI is reinventing how consumers interact with brands. Technologies like virtual influencers, smart shopping carts, and AI-driven fashion avatars are creating immersive, customized shopping journeys. With 47% of retailers leveraging AI to develop new products and services, the line between digital and physical retail is blurring, offering shoppers deeply personalized and frictionless experiences.
2. Smarter Supply Chains & Inventory Management
For retailers, managing supply chains efficiently has become mission-critical. AI’s predictive analytics can forecast demand, optimize stock levels, and reduce waste, ensuring that businesses are neither overstocked nor underprepared. However, a major challenge remains—data integration. While 74% of retailers recognize data management as a key hurdle, only 28% have successfully implemented system-wide data integration, and a mere 7% have fully automated the process.
3. Scaling AI: The Road Ahead
Despite the promise AI holds, many retailers are still navigating the complexities of AI adoption. The report notes that only 24% have a clearly defined, ambitious vision for AI as a core component of their organizational transformation. Meanwhile, 67% expect their AI budgets to grow significantly over the next year, underscoring the sector’s commitment to leveraging AI for long-term success.
Retail’s AI-Driven Future: The Next Chapter
Puneet Mansukhani, Co-Lead Consumer & Retail and Head of Global Retail Digital Technology and Transformation at KPMG in India, encapsulates the industry’s sentiment: “AI is revolutionizing the retail landscape by enabling retailers to deliver seamless, personalized experiences that meet the evolving expectations of consumers. Those who embrace AI at the core of their strategy will not only keep pace with the industry but will set new standards for innovation and customer engagement.”
As AI continues to redefine retail, businesses that strategically harness its capabilities will emerge as market leaders. From intelligent automation to next-gen customer experiences, the future of retail is being written in algorithms—and those who innovate today will shape tomorrow’s industry landscape.
