Photo Source: Andrea Piacquadio
A recent survey conducted by Zoho between October 7 and 12, 2024, has shed light on consumer sentiment toward AI-driven personalisation in retail. The research, based on responses from a diverse panel of 500 UK consumers, reveals a blend of optimism and scepticism about AI’s role in shopping experiences.
AI is a Growing Force in Retail
AI technology has become an important part of retail store operations, customer service, and personalisation. Retail giants such as Amazon credit 35% of their sales to AI-powered recommendations.
Additionally, 62% of respondents to the Zoho survey shared positive experiences with AI-driven tools like self-checkout kiosks and personalised product suggestions, highlighting the potential for AI to enhance convenience and efficiency.
AI appears to fall short in meeting broader consumer expectations for meaningful personalisation despite its potential.
The Zoho survey, conducted in October 2024, gathered insights from 500 UK respondents across various demographics, including age, gender, and region. The use of a professional market research panel ensured a representative sample, providing a nuanced understanding of consumer behaviour and attitudes toward AI in retail.
Trust Issues Undermine AI’s Potential
Only 8% of survey participants said AI personalisation significantly enhanced their shopping experience, with an additional 29% feeling it somewhat improved their experience despite its growing adoption. In contrast, 53% of respondents reported no impact at all, indicating that many consumers remain unconvinced of the technology’s benefits.
When asked about their preferences, 73% expressed a clear inclination for human-generated recommendations over AI-driven ones, and a mere 7% of respondents reported full trust in AI personalisation. This mistrust highlights a critical gap between what the technology offers and what consumers desire.
As Sachin Agrawal, MD of Zoho UK, noted:
“AI has proven itself to be a useful business tool when used efficiently, but our data shows that the technology is falling short of consumer expectations for meaningful, tailored interactions in the retail sector.”
Frustrations with Automated Systems
Challenges with AI were evident in consumer frustrations. While 78% of respondents said they had not encountered issues with retail AI, 22% reported difficulties, especially with automated customer service. Common complaints revolved around the inability of AI systems to address specific queries effectively, leaving customers dissatisfied.
For 35% of respondents, having access to human representatives remains essential, with many saying they would not trust a brand that relies solely on chatbots for customer service.
A Path Forward for Retail AI
The findings suggest that retailers must take a balanced approach to AI adoption. Agrawal emphasised the importance of focusing on customer needs rather than technological hype:
“As AI technology becomes more central in retail, businesses need to look beyond the technology hype and focus on what matters most, the customers. By mapping out customer touchpoints, assessing digital maturity, and optimising areas where AI adds value, businesses can unlock its full potential. However, moderate expectations should be set, and businesses should scale gradually to regularly evaluate if models need to be adjusted to deliver further ROI.”
This is particularly relevant as the Christmas shopping season approaches. Agrawal highlighted this period as an opportunity for retailers to refine their AI systems and better integrate human interaction.
“AI should be more than efficient. Its output should feel personal, respect consumers’ data privacy, and complement human touchpoints. If consumers aren’t feeling the benefits, retailers should consider rethinking their approach to help make AI a trusted part of the retail experience.”
Striking a Balance for AI’s Future in Retail
While AI in retail has demonstrated clear benefits in areas like efficiency and sales growth, the Zoho survey highlights that it has yet to win the trust of many consumers. Retailers looking to maximise the potential of AI must prioritise transparency, personalisation, and the seamless integration of technology with human touchpoints.