The value of AI in the retail market increased to an estimated $7.1 billion in 2023, marking a jump of 29% from the previous year. Beauty retailers have adopted the technology in a range of ways, from virtual try-on systems to robot beauty technicians, and the implementation of such technology does not seem to be coming to a halt anytime soon. According to CHI Software, six in ten retailers plan to adopt AI within the next year, with 59% doing so to improve the customer experience, 49% to boost company productivity, and 44% hoping to achieve cost efficiency and returns on investments.
The fast-paced integration of AI across retail has led to an "adopt or fail" mindset, with some arguing that incorporating AI is the only way to remain relevant in the market. "To compete in the complex, competitive, and changing retail environment today, adopting these technologies is no longer optional; rather, it is essential for long-term survival," says a spokesperson for AI development company Daisy Intelligence.
While it may seem as though almost every big name in beauty uses AI, some are just beginning to experiment with the potential the technology provides. UK health and beauty giant Boots is the latest retailer hoping to reap the benefits, planning to introduce a personal shopper chatbot tool for its website users.
According to reports, the initiative is in its early testing phase, with plans for significant developments in early 2024. The chatbot will focus on recommending beauty products to individual consumers based on their needs and wants, which the company believes will ultimately result in enhanced online sales. The service will be provided by ChatGPT and is one of several plans for development between Boots and Microsoft, which went into partnership in 2019.
Superdrug, arguably Boots' biggest competitor, has tried and tested AI's potential to upgrade consumers' experiences with beauty. The retailer initially began experimenting with chatbot's in 2017, when it introduced "Bella" an AI assistant that helped customers navigate a limited-edition Simple collection. Today, Superdrug utilizes Futr AI's SaaS chat solution on its website, which allows consumers to ask questions and converse with a bot through machine learning.
The retailer takes its AI usage further with Skin Advisor Technology (SAT), which was implemented by popular AI platform Revieve. SAT combines proprietary computer vision technology and mobile skin diagnostics that analyze over 120 metrics from a user's face and assign information on products that best suit their skin type. It was reported that the adoption of SAT saw an average order value growth of 20%.
While the benefits AI is bringing to retailers is clear, how much value are these additional services bringing to consumers? During the holiday period, 52% of 1,000 survey respondents stated they planned to buy more gifts due to an easier shopping experience made exciting by AI. A further 76% said they expected to make fewer returns this year because AI will help guide their purchases. Six out of ten respondents even went as far as to state they no longer feel anxious when holiday shopping because AI helps them be more confident in their purchase decisions.
However, some consumers turned the other way when presented with AI assistance during the shopping season. According to software company Storyblok, 85% of 1,000 survey respondents claimed they weren't interested in using AI to help them decide on purchases. Three in five consumers stated if presented with an AI recommendation, they would not be more likely to make a purchase, and one in five said AI recommendations make them less likely to buy a product.
While the willingness to adapt to AI is varied among consumers, analysis of holiday sales performance from Salesforce reveals that AI influenced a predicted $194 billion in global online spending during November and December. In cyber week alone, AI influenced $5.1 billion of online sales.
Figures such as these continue to push the opinion of those who see AI as a revolutionary and necessary move for retailers. "The data doesn't lie. The adoption of new technologies has resulted in a transformation of the retail industry. The implementation of these technologies is undeniably improving retail organizations, making them more efficient and profitable," says Richard Kestenbaum, co-founder of Triangle Capital LLC. "Though implementation can be both daunting and challenging, it continues to remain necessary, not optional, to keep pace in the current environment. It's time for everyone else to leap over their hesitation and embrace what's coming."
It is predicted that retailers individually spent upwards of $7 billion on AI-enabled tools in 2023. This figure is expected to grow to a much larger $29.45 billion by 2028. Although some are slower to adapt than others, it is clear that the retail world holds value in AI services and will continue to do so for the foreseeable future, regardless of consumer opinion.
