AI Adoption Expands in Retail Sector - Yet Concerns Persist Over Preserving Human Interaction
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The retail sector is increasingly adopting Artificial Intelligence (AI) to enhance customer interactions, improve operational efficiency, and stay competitive, according to a recent study by Monday.com. However, the report also highlights several challenges that retailers must address to make the most of AI.
Widespread AI Adoption
The study reveals that about 63% of retailers believe failing to adopt AI agents within the next two years risks falling behind, and 58% expect most customer interactions to be AI-handled within five years.
AI as Augmentation, Not Replacement
Retailers want AI to collaborate with and empower human employees rather than control or replace them. They emphasize human-guided AI to boost decision-making and customer personalization at scale.
AI Driving Sustainability and Operational Gains
Another key trend is the expectation that AI will improve environmental goals, reduce waste and overproduction, and enhance pricing responsiveness and online service quality.
Common Challenges and Concerns
Despite the perceived benefits, retail leaders express concerns about the reliability and quality of AI outputs, with over 60% worrying about inconsistent or low-quality outputs. Other challenges include privacy/data issues, integration complexity, high costs, employee resistance, and the risk of alienating customers.
Skepticism about AI Autonomy
Nearly half of retailers doubt AI tools are ready to fully manage customer journeys, and 92% say AI is not yet autonomously making key business decisions.
Customer Acceptance Gap
While retailers are optimistic about AI, many customers dislike AI in service interactions. Over half (53%) actively dislike AI in customer service, and 80% prefer human support even with similar wait times or outcomes.
The Path Forward
The study shows that for AI to be effective, it must be integrated into existing systems in the clearest and most integrated way, reducing friction rather than creating more. Monday.com UK&I Regional VP Ben Barnett emphasized this point, stating that AI is no longer a future investment for UK retailers, but something they're using right now to stay competitive.
AI Leadership and Teams
Nearly two-thirds of retailers now have dedicated AI leadership and teams, including Chief AI Officers, to navigate these challenges and maximize the benefits of AI.
In conclusion, the Monday.com study underscores that while retail AI is rapidly growing and seen as critical, the path forward depends on overcoming trust and quality concerns, high costs, and ensuring AI complements humans rather than replaces them. It also highlights the need to address strong consumer desires for a human touch.
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