Retailers have realised they need to invest in AI and digital solutions to stay agile, relevant and competitive in their offerings. Mark Scrivens, FPT Software UK Chief Executive Officer at FPT Corporation, outlines the digital opportunities available to retailers.
Many forces are driving the transformation in retail – advancing AI technologies, expert human insight and customer demands for hyper-personalised convenience in their browsing and buying. The UK AI in retail market is expected to reach a projected revenue of around US$1.68 billion by 2030 with a compound annual growth rate of 16.7% expected from 2025 to 2030.
Retailers have realised they need to invest in AI and digital solutions to stay agile, relevant and competitive in their offerings. Those retail leaders that embrace innovation have a huge opportunity to stay ahead – from personalised promotions and shopping experiences to dynamic inventory management, supply chain optimisation and cashier-less checkouts. AI is shifting the goal posts for customer engagement, operational efficiency and profitability.
According to research, 23% of Gen Z’ers expect a robot or AI assistant to be styling them by 2040. However, there are some challenges and considerations ahead for brands to effectively reap the rewards of AI to enhance the online retail experience and drive future growth.
Retailers’ biggest challenges with advanced Machine Learning
As much as five years ago, retailers were urged to get their data in order and integrate and now time’s run out. The chasm is widening between those with outdated websites and clunky channels, with retailers of the future embracing intelligent and immersive technologies to create capabilities to drive sales and loyalty. 2025 could be the year that betting on AI separates those that will make it from those that can no longer compete.
Those stuck in five-year budgetary cycles must invest in AI technology now to avoid falling behind as there are clear consequences to retail stagnation. Many retailers are hindered by legacy systems that prevent effective data utilisation and are losing customers, competitive edge and revenue. AI relies heavily on accurate and complete data, meaning retailers that can’t get data in order will fail to realise value from their AI investments. Those considering and exploring AI technology must activate their structured and unstructured data as modernising legacy data is crucial for retailers to advance both front-end highly personalised consumer engagements and back-end operations.
Despite its potential, businesses must also carefully address potential AI drawbacks to alleviate customer concerns and maintain consumer trust. Concerns include poor-quality interactions, risks of data misuse and the lack of meaningful human engagement.
It’s not all about AI
However, AI technology isn’t effective on its own. There are three core pillars of advanced Machine Learning to help ensure meaningful business outcomes. These are: talented data experts who can manipulate algorithms, accurate and complete data and the methodology to combine talent with data to deliver value.
With consumers facing expanding product options, retailers must develop innovative strategies to capture attention and foster long-term customer loyalty. Partnering with a trusted digital commerce partner will help a business navigate the complexities of the digital landscape to ensure they thrive in the global marketplace. FPT’s unique talent and creativity, problem-solving abilities and strong work ethic can drive innovation through AI and software engineering.
For instance, AI-driven inventory management and garment sizing – two critical areas where retailers can delight customers while avoiding mis-stocking (under- or over-stocking) and enable more accurate sizing recommendations. This can significantly reduce returns and costs and boost supply chain efficiency.
The next AI opportunity for retail
With consumers facing expanding product options, retailers must keep up with the latest trends in 2025 to stay ahead. One of the biggest innovations in automating real-time customer interactions is conversational AI, which can understand context, tone and consumer intent, enabling more natural and engaging interactions. This means retailers can leverage chatbots and virtual assistants to automate real-time customer interactions. With natural language processing (NLP), these systems can convert conversations into structured data, providing valuable insights into customer expectations from online stores. Thus, businesses gain deeper customer insights and deliver personalised answers to the customers’ inquiries, which further elevates the online customer experience.
By leveraging AI, companies can deliver hyper-personalised experiences, from customised product recommendations and targeted marketing campaigns to individualised customer support and dynamic pricing strategies.
There is also a big opportunity to blend AI with immersive extended reality (XR) technologies in retail, such as VR and AR, which have the potential to offer virtual sizing tools for more accurate clothing purchases and AI assistants for purchasing items to fit specific spaces, like TVs, to address current online retail shortcomings and enhance the customer experience.
AI use cases that can build efficiency and boost customer loyalty
While retailers explore innovative ways to use AI, many of the following use cases are becoming widely accepted as standard by retailers as ways to get closer to customers, build efficiency and increase sales:
- Training: A brand new training model for store associates that is built on Generative AI that applies FPT’s Adaptive Micro-learning method can help to improve sales competency and business efficiency.
- Virtual customer service: An advanced AI-based virtual assistant can redefine customer experience. It can streamline internal staff communication for retail companies to resolve enquiries about processes, compensation and benefits, promotion, product information and technical support. Offering a more human touch, FPT’s AI-based assistants can understand customer intent and provide instant responses with 100+ synthetic, natural-sounding voice options of gender and regional accents to give an understanding and friendly response that builds customer trust and loyalty.
- Document processing: Since retailers accumulate huge amounts of data in terms of documents, emails, images, an AI-based solution automates the processing of up to thousands of retail documents per hour with high accuracy, supporting a variety of templates such as invoices, goods delivery/received notes, receipts and tax documents.
- Customer surveys: FPT’s AI-enabled CSAT Autocall solution automates customer surveys for products and services, capturing real-time scoring during calls, generating detailed and insightful information that can inform retail strategies.
- Inventory management: With AI-based inventory management tools, retailers can significantly reduce returns, improving both retailer costs and supply chain efficiency. Retailers must share data across their offline and online channels to ensure customer information is shared from browsing to point-of-sale (PoS).
Taking consumers on the AI journey
AI in retail is growing at an impressive pace. With consumers facing more options online, retailers must harness the opportunities that AI can bring to the customer journey, build consumer trust and engagement in the new digital realm and foster long-term customer loyalty.
Before implementing new AI-based tools and systems across business functions, retailers must first perform ethical impact assessments to recognise potential ethical implications. AI developers should adopt a user-centric approach to AI software development ethics by involving various stakeholders in the creation of AI systems. User-first tools will help to build trust and to keep their customers close to them on this new AI journey.
Above all, businesses need to offset concerns around AI, starting by working with data professionals to ensure unbiased training data. Brands need to get comfortable with utilising unbiased datasets while ensuring diversity in data points to enhance the AI model’s reliability. Additionally, enabling seamless human-AI collaboration will further support the journey in using AI responsibly.
In the new era of AI in retail, ensuring people, data and methodology are closely aligned is the secret to unleashing AI’s potential for boosting creativity, efficiency and the bottom line.
