A new report offers clues to the retail potential of today’s hottest technology

Generative artificial intelligence (GenAI) is poised to reshape the retail environment – from enhancing transaction security to delivering more personalized shopping experiences. Forward-thinking enterprises that have adopted GenAI are already seeing measurable improvements in customer retention, forecasting precision and strategic decision-making.

Yet, many retailers remain hesitant to jump on board. Concerns about their own data analytics maturity often hold them back, creating uncertainty around whether they’re equipped to implement GenAI effectively.

Can organizations harness GenAI’s full potential without first reinforcing their data foundations? And how can they navigate the integration challenges that risk stalling their progress?

These are some of the questions explored in a new collaborative study from PYMNTS Intelligence and Fiserv – GenAI Applications in Retail Transaction Analysis: Industry Trends and Insights. The report examines the role of GenAI in retail, and is based on results from a summer 2024 survey of 390 executives working at retailers that generated at least $500 million in revenue in 2023.

Highlights from the report:

• Less than 1/3 of retailers are highly confident in their data capabilities

• 49% of retailers report that transaction and payments data have helped guide their customer retention strategy and decision making in the last year

• Nearly three-quarters of retailers plan to step up their investment in GenAI next year

• 68% of top GenAI users say systems integration is their No. 1 challenge

 

Top uses of GenAI

Over 90% of retailers surveyed now leverage GenAI to analyze transaction data for various purposes. Common applications include data privacy and security (58%), customer segmentation (54%) and forecasting (53%). Data-driven organizations apply GenAI in an average of 3.3 out of six areas, with 75% adopting it in the top three.

Adoption varies by sector – grocery retailers tend to use GenAI less extensively, with 52% applying it in two or fewer ways, compared to 41% in non-grocery retail.

Reaping the benefits

Retailers using GenAI across multiple functions report stronger gains – over 60% see improvements in product recommendations, transaction security and customer retention, well above the 48% industry average.

Higher adoption also boosts strategic use of transaction data: firms applying GenAI in five or six ways identify 9.4 areas of data-driven influence in their decision making, compared to 7.5 among all firms. As usage expands, these organizations are better positioned for enhanced operational efficiency and improved customer engagement.

 

Making the investment

Of the retailers surveyed, nearly three-quarters plan to boost GenAI investment next year, signaling its rising value as a long-term strategic asset. Data-driven firms are leading the way – 92% aim to expand GenAI use for transaction data, versus 63% of their less data-reliant peers – highlighting its growing role as a competitive differentiator. But despite strong interest in GenAI, adoption hurdles persist: 68% of heavy users report system integration issues, compared to 48% across all firms. Customer privacy and real-time data access also pose greater challenges for high-adoption retailers, as reported by 57% – more than the overall average of 46%.

The GenAI future

The numbers suggest that GenAI is not just an option, but can be a true differentiator for retailers in fortifying customer loyalty, operational efficiency and security – and undoubtedly many other business functions yet to be tapped. Businesses that proactively address any technical obstacles to adoption – strengthening their data management and analytical capabilities, as well as their data infrastructure – will be best positioned to maximize GenAI’s impact and gain a lasting advantage. Those that hesitate risk being left behind.