Navigating the Benefits & Risks of AI in Retail



We're only standing at the precipice of the AI revolution, but there's still opportunities to take, challenges to mitigate, and decisions to be made.

We are seeing a huge push in the retail sphere for brands to bring AI into various aspects of their infrastructure, from personalisation to customer-centricity.

AI brings vast potential, and we're genuinely excited not just by what is capable right now but how the technology will continue to evolve in the near and long-term future.

But it's important to know when to understand the risks that AI can bring as well as the challenges and worries that come with using it. And most importantly, know when to stop using computer algorithms and rely on human instinct instead.

Our experience in retail technology tells us that not every problem needs AI as the solution. Progression is always the goal, but understanding past experiences should be crucial to your strategy.

The Promise and Perils of Generative AI

When we talk about generative AI, we mean machine learning that can create text, images or video.

Most retailers probably use generative AI in some way as part of their content marketing plans. That's because AI can speed up and improve many processes, such as writing product descriptions or customer emails. It can also help increase productivity.

From a content creation perspective, there's much for retailers to be excited about; from automating new imagery of personalised items, to tailoring specific content for different markets.

You might want to set up your platform so your customers can see how they would look in a particular piece of clothing. Your generative AI needs to understand different body sizes, shapes, skin tones, and hair colours – everything that makes each person who shops with you unique.

But without careful control and oversight, you could find yourself at risk of reputational damage. The ethics of AI are still a big topic of discussion, not just in retail but all over the world.

Bloomberg has published a fascinating insight into the biases behind some of AI's best-known text-to-image technologies. At just a glance, you can see how ingrained biases are substantially impacting the generative output. Without paying due care and attention, you could inadvertently cause irrefutable harm to your business.

By 2025, big companies will be using generative AI tools like Stable Diffusion to produce an estimated 30% of marketing content.

Generative AI Bias, Bloomberg

In retail, it's essential to analyse and mitigate any risks associated with generative AI- it needs to be moderated by able content creators.


  • How does the generative imagery or automated content you bring in show up in physical outlets or across social commerce platforms?

  • If you're using generated images, how do they compare to the user-generated content posted online by your customers?

By taking a strategic approach to investing in AI, you can ensure it's being used in the right parts of your infrastructure. Instead of modelling it on trends, it should be implemented solely where it's needed and where it can make invaluable improvements (like productivity, effectiveness, and speed).

AI investment ultimately costs money, so decision makers in ecommerce must identify the appropriate tools, plugins and platforms to grow your business in order to see a ROI.

Common mistakes retailers are making with AI

In their desire to be innovative, some retailers have mistakenly put AI solutions in places where people should always come first.

Customer Service is a clear example of this.

In our whitepaper, Bricks & Mortar Stores vs Online Retail, we asked shoppers how they felt about shopping online. The issue of online customer service came up repeatedly, with shoppers saying how frustrating it was that they couldn't easily talk to a real person.

One in 10 shoppers say that a lack of ability to answer their questions is a main barrier to purchasing an item online.

Sherwen Studios, Whitepaper, Bricks and Mortar Stores vs Online Retail

Retailers have rushed to invest in customer service chatbots but have failed to integrate them into their customer service dashboards, managed by an individual person. Even though these chatbots are getting better at filtering initial questions and sending people to more FAQs or knowledge resources, the time it takes to reach a customer advisor can be frustrating and hurt the overall customer experience.

The use of customer service chatbots has its place. They can be methodical and efficient. And as technology improves and the use of data rises, they will continue to be a mainstay of any online retailer.

But they are limited in their effectiveness if they cannot quickly direct a customer to an advisor within minutes. A poorly integrated chatbot could ruin all the work you put into your customer-centred platform.

Online shopping isn't just about buying and selling things; customers want a dynamic experience that puts their needs first. AI can help by changing the images throughout the site, making personalised offers, and improving the search process by understanding your intent.

Online shopping isn't just about buying and selling things; customers want a dynamic experience that puts their needs first. AI can help by changing the images throughout the site, making personalised offers, and improving the search process by understanding your intent.

However, it can't and shouldn't be used to replace human interactions with customers, especially when solving complicated problems or dealing with emotionally charged situations.

Your customers still want a human-to-human approach

You might be tempted to embrace AI to streamline processes and reduce costs, but you cannot lose sight of the irreplaceable value of human touch and experiences.

Our white paper confirmed that customers still view shopping as a social experience, particularly in-store. They want to experience the emotions and the sensory element, from the touch and smells to the sounds around them.

This is something that AI simply can't replicate.

20% of shoppers feel that online shopping is missing social interaction with family/friends.

AI can look at data and do tasks automatically but can't copy human emotions, creativity, or intuition. People are still needed for customer engagement, personalised recommendations, and to help them make well-informed buying decisions - especially in a physical space.

Finding the right balance between AI-driven efficiency and interactions focusing on people is key to building lasting relationships with customers.

Is now the right time to invest in AI for your ecommerce store?

The possibilities and solutions of AI will continue to grow, but defining AI's role and purpose is key to any decision-making for businesses looking to invest.

Choosing to invest in AI simply because others are using a specific plugin or because you've seen how it can be used elsewhere could be the first step to failure.

In the right environment, AI can be a driving force towards substantial business growth.

It can speed up efficiency, drive innovation, increase conversions, boost sales, and improve every small interaction on your site.

But in a different situation, the wrong use of AI can overshadow your site's usability. It can take your attention away from the primary goal of what you're trying to do and become an ill-fitting luxury.