A new study by KPMG in Canada revealed that a significant number of Canadian retailers see generative AI as essential for staying competitive.
The study showed that retailers are increasingly adopting generative Artificial Intelligence (AI) technology, with many integrating it into their operations to boost productivity, predict demand, and offer personalized customer experiences.
A recent survey conducted by KPMG included responses from executives at 135 Canadian retail companies across various sectors. The findings show that over 80 percent of respondents believe that investing in generative AI is crucial to remain competitive, and an equal percentage agree that they need to shift to a generative AI operating model within the next year.
Currently, nearly 40 percent of retailers have already implemented some form of generative AI solution. Another 39 percent plan to introduce their first generative AI solution within the next six months. The most common uses for generative AI among these retailers include fraud detection, demand prediction, personalized product recommendations, improved product search engines, and optimization of scheduling and logistics.
"It is clear Canadian retailers see generative AI as critical to their futures. The challenge is identifying use cases that add value to organizations since there are myriad ways retailers can use the technology to become more efficient, productive, and profitable,” said Kostya Polyakov, partner and national industry leader of KPMG in Canada’s consumer and retail practice.
Generative AI is expected to significantly impact revenue, with 39 percent of respondents anticipating a revenue boost of 6 to 10 percent, 26 percent expecting a 10 to 15 percent increase, and 23 percent seeing a 3 to 5 percent gain. Additionally, 42 percent expect an improvement in sales return on investment (ROI) of 10 to 20 percent, while 41 percent foresee a 6 to 10 percent boost.
Despite the optimism, nearly 80 percent of respondents expressed concerns about how consumers might respond to AI-generated imagery. Peter Hughes, national customer experience practice leader at KPMG in Canada, emphasized the need for responsible AI use, stating, “Retailers need to think carefully about how they’re using the technology because it could create reputational, legal, and financial risks if not used properly and responsibly.”
Less than half (46 percent) of respondents in the supply chain have applied generative AI, but many see its potential. Four in ten respondents using or planning to use generative AI in their supply chain cite its ability to unlock prescriptive analytics capabilities for customer or sales order fulfillment as a primary reason. Other significant drivers include the ability to analyze information across disparate systems and generate accurate sales predictions.
However, implementing AI presents challenges, with two-thirds of respondents citing issues with non-validated, inaccurate data inputs. Additionally, 71 percent face difficulties accessing or leveraging data.
KPMG in Canada surveyed executive-level decision-makers at 135 Canadian retail companies between April 30 and May 6. The study included companies from various sectors, such as grocery, health and beauty, and clothing, mostly based in Ontario and Quebec.