When iconic Demin brand Levi’s reportedly rolled out its chatbot platform, Levi’s Virtual Stylist, to provide recommendations to customers, it was essentially reflecting a larger market trend. The bot gets basic details such as size, fit, material, and even preferred brands to offer quick suggestions to users. AI-powered chatbot assistance is in fact gaining popularity across the global retail industry owing to its ability to offer dedicated and personalized responses to customers to boost their experience.Many of theseAI chatbots are equipped with Natural Language Processing (NLP) and Machine Learning (ML) technologies, which enable real-time insights regarding customer preferences, sentiments and behavior patterns. 

For consumers, it would possibly not make much difference whether it’s a bot or a human responding, as long they get what they want.  Or does it? 

A report sourced from Retailwire.com called ‘Artificial Intelligence for CX: Exploring Consumer Perceptions’, throws up some interesting findings:

• 55% of consumers would interact with an AI-powered virtual agent if it meant a faster, easier resolution to a customer care issue.
• 45% of consumers thought it was appropriate for brands to use AI to assist customers in resolving their customer care issues.
• 41% of consumers have an improved opinion of companies that are expanding their use of AI-powered technologies (whereas 17% have a decreased opinion).
• If resolving a customer care issue using an AI-powered solution, consumers’ top channel preference would be Online Chat (38%), followed by Text/SMS (18%), and Email (12%).

Well, irrespective of the percentage of consumers who prefer AI-led assistance, the fact is that AI is here to stay in more ways than what one might anticipate. According to Fortune Business Insights, the global artificial intelligence (AI) in retail market size was valued at USD 7.14 billion in 2023 and is projected to grow from USD 9.36 billion in 2024 to USD 85.07 billion by 2032, exhibiting a CAGR of 31.8% during the forecast period. As it points out, with retail businesses needing to prioritize productivity to remain competitive in the market, they will increasingly leverage the support of AI in automating operations, thus increasing profits and optimizing business processes.

A 2024 Consumer Study from IBM Institute for Business Value also notes that only 9 percent of 20,000 customers across 26 countries report satisfaction with their in-store shopping experiences and that AI is reducing their pain points by giving them better information that enables faster decisions. The crux of the report is that technology when seamlessly integrated with consumer experience produces best results, as against being an “afterthought” or an add-on.

But AI adoption comes with its own challenges. James Langford writing in Biztechmagazine.com and quoting credible sources, highlights some of the “Pitfalls of AI Applications”. Some of these challenges are resonant of the common objections to Gen AI usage. The objections stem from a range of issues - from violation of intellectual property rights and biases to factual errors, inaccuracies and misinformation.

James Langford in fact quotes a KPMG report, “One of the pitfalls of current-state generative AI is that it can create outputs that seem entirely reasonable while also being entirely inaccurate. It can ‘hallucinate’ facts and make mistakes in reasoning.” Well, it quite justifiably raises cause for concern. Experts have recommended that organizations could draw up a framework or action plan to mitigate the risks associated with AI algorithms. There is also a need for building authentic usable data from which generative AI models could draw information. The National Retail Federation in the US has reportedly formed a working group for its members to monitor some of these concerns and issue policies related to Gen AI. Perhaps a similar body in India could initiate steps along the same lines so that all stakeholders – consumers, brands, retailers, their partners, and others could meaningfully benefit from the use of AI.

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