How retailers can build trust in their use of AI

It was not surprising that the dominant conversations at NRF this year were about embedding AI in retail, especially generative AI. “Retail’s Big Show” demonstrated a plethora of AI use cases and demos, with many discussions around both the array of opportunity but also the risks of getting it wrong – it’s one to make or break reputations.

I expected to be inspired, but many use cases covered old ground – the focus was on applications like call centre automation, and personalization of the shopping experience for consumers, or the working experience for store associates. It’s amazing how swiftly these use cases are normalised in my mind, I’m already anticipating seeing them in store myself.

Whilst there is widespread consensus among business leaders about the transformative power of GenAI, what I’m seeing with my clients is some initial caution and a high degree of uncertainty. This is also born out in the recent EY Reimagining Industry Futures study, where 68% of consumer companies said they’re building proofs of concept around applications for GenAI, however, 36% say they’re unsure where and how it can best be deployed to create value, and 35% are uncertain about the governance required to manage it. Creativity and innovation are running ahead of the business case and compliance, leading to a sense of uncertainty and unease.

At NRF the disconnect was described as an “AI trust gap in retail” in a presentation by Salesforce.com. Every retailer should have an AI strategy and benefit from what it GenAI can unlock (it’s with good reason we call it the Swiss Army Knife of technology – a tool that’s useful in every situation). But concerns about high-profile examples of potential biases and “hallucinations”, as well as issues like privacy and data control are tempering the enthusiasm for GenAI implementations.

In addition, the EY Future Consumer Index shows that when it comes to technologies like GenAI, consumers feel split between reliance and distrust. While more than 70% of people are already engaging with AI in their daily lives, 61% feel that governments should do more to regulate its use. And while almost two-thirds (68%) expect it will make their jobs easier, 35% are worried it will replace their jobs altogether.

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This uncertainty shows the inherent challenge for consumer companies, with the widespread recognition of GenAI’s transformative power and acceptance of its pivotal role in keeping their business relevant in the future, being challenged by the risks associated with using GenAI and general distrust amongst consumers.

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To address these challenges, as with the implementation of any emerging technology, it’s essential to build a clear and consistent governance framework to ensure your business mitigates the potential risks. Given the very prominent concerns that have been raised about GenAI, the implementation and governance should go hand in hand from day one.

Every business will have its unique challenges, but in each case, EY’s deep grounding in business and technology transformation, governance and risk management mean we’re well placed to help identify them. For example, we’ve helped responsibly scale GenAI across organizations, including the ideal architecture, governance and use cases, with a focus on value creation. Benefits can be diverse, from more efficient customer service calls to a reduction of hundreds of hours per month on reporting processes, to improved brand positioning through enhanced product descriptions.

It’s clear the appetite for AI use cases among consumer companies is huge, but it’s important to be thoughtful and proactive about how you take advantage of it. A useful first step is to run a maturity assessment for your business to provide a strong and trusted understanding of where AI use cases are being explored or where AI is integrated, as well as being able to evaluate whether it’s performing ethically. We often find GenAI use cases in pockets across various functions, and clients coming to us seeking help to set up a Centre of Excellence in a bid to take back control and standardize their approach. It’s one way to drive organizational scale and transformation responsibly and unlock new growth opportunities.

Balancing business opportunity with governance is crucial. Being able to offset the need to act quickly on GenAI to avoid giving competitors a strategic advantage, whilst also minimizing your exposure to risk is going to be one of the most critical balancing acts for businesses over the coming years.

Find out more here: How GenAI changes the way CPG and retail operate — and consumers too