AI revolution driving innovation in retail

Artificial intelligence (AI) is streamlining operations and improving customer experiences across the retail value chain. Read more about the ARA’s submission on the responsible use of  AI in retail and the considerations for your business.

With intense competition in today’s retail sector, integrating technology and customer experience isn’t just a trend—it’s a survival strategy. Technology such as AI is a key driver, streamlining operations and improving customer-brand interactions across the retail value chain. As the industry shifts towards ever increasing modernisation, AI’s role is set to grow.

However, its implementation requires a cautious approach, ensuring its safe and responsible use by the sector, to the benefit of all key stakeholders.

Inefficiencies caused by the inability to adapt to the changing competitive environment leave traditional retailers vulnerable to the forces of new electronic retailers. In order to maintain competitiveness and to continue in the ever-changing market where customer needs and expectations differ, retailers need to be leaner, more flexible, more agile and adapt to new technologies rapidly and renew their retail processes. USF Gloserv.

Data analytics and machine learning have been an evolving toolset of the retail sector for the past twenty years.  AI encompasses that evolution. As analytical power and complexity increases, so do the opportunities.  So too, do the risks.  A recent Federal Government consultation has requested stakeholder feedback on the safe and responsible use of AI.  The ARA submitted a number of recommendations to this call, which will help to manage risk, whilst enabling the retail ecosystem to maintain and grow strategic innovation supported by AI.

The ARA supports a risk-based approach to determining the safe and responsible use of AI.  We recommend that any controls placed on the utilisation of AI are proportionate to potential risk.  A low-risk example could be using AI to forecast future stock requirements.  An error in this case will result in cost, or inconvenience of one type or another, but is unlikely to cause actual harm.  Whereas, using AI in a recruitment process, where decisions are made about an individual based on personal data; that’s riskier.  In the cases with higher risk, there should be safeguards and controls in place to prevent poor or damaging outcomes.

The ARA has recommended that there should be an agreed Australian framework for the responsible use of AI.  We support a new role in government to facilitate deeper consultation and lead to a straightforward and effective way to create cross-collaboration with industry, academia, and government.  These collaborations will be imperative in establishing best practice guidelines for utilising AI, supporting growth and creating advantage, without compromising safety or security.

AI’s transformative impact in retail is unquestionable, with potential applications spanning the retail value chain from planning, product development, inventory management, customer engagement and retention. AI is now at the forefront of fighting retail crime.

A large part of this theft detection is driven by the deployment of a new generation of smart cameras and edge appliances containing cost-effective AI processors that can be coupled with computer vision to more closely — and intelligently — scrutinize checkout transactions as well as in-store behaviour that may be deemed suspect. Security Magazine

However, it is necessary to avoid the case where unchecked adoption might lead to unintended consequences. With data privacy concerns on the rise and the ethical implications of AI becoming more apparent, it is paramount for retailers to strike a balance between leveraging AI for growth and ensuring ethical considerations are at the forefront of its deployment.

At the core of every successful retail business is consumer trust. Shoppers are becoming increasingly aware of how their data is used, and particularly in those cases with higher risk, a transparent AI deployment strategy can serve as a major differentiator in the market. When consumers are confident that their data is being used ethically and responsibly, they are more likely to engage and remain loyal to a brand.

While personalisation can bring benefits to consumers, they may resist personalisation if they deem that the collection and use of personal data that underpin personalisation is too invasive. This tension has been termed the Personalisation-Privacy paradox. Canhoto, Keegan, Ryzhikh.

For the successful and ethical deployment of AI in retail, there’s a need for continuous learning and skilling within the industry. The ARA emphasises the importance of investing in training programs, ensuring that professionals at all levels are equipped with the necessary skills and understanding of AI. This not only prepares them for the rapidly changing retail landscape but also ensures that AI is used judiciously.

AI presents a nexus of opportunity and responsibility in the retail sector. While its capabilities can drive growth and operational efficiency, it is incumbent upon retailers, guided by best practices, to ensure the deployment of AI is both ethically sound and appropriately transparent. The future of retail will undoubtedly be shaped by AI, but it’s up to industry leaders to ensure this future is both innovative and responsible.


Alison Howe is the ARA’s Policy Manager. She authored the ARA Submission on the Responsible Use of AI in consultation with members.



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