Consumers Harbor Hesitations About AI’s Place in Retail

Meghan Hall
·5 min read

Retailers might be excited about artificial intelligence—but consumers have their reservations.

According to new data sets from third-party payment platform Square and technology provider SOTI, both groups have a long ways to go toward building trust and adopting AI.

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Though retailers have shown interest in amping up the in-store and online experiences with AI, issues with existing technology and questions over privacy have put a damper on consumers’ willingness to embrace it.

Per SOTI’s data, 23 percent of consumers say they feel excited about how retailers will use AI to improve customer experience and personalization. But when presented with specific use cases for the technology’s potential to impact the shopping experience, consumers responded more optimistically.

When asked which use cases they’d be receptive to, just under 40 percent of consumers showed an interest in using augmented reality to view items, AI to predict the best times to purchase items and conversational digital shopping assistants.

While consumers might not be jazzed about the uptick in AI, they seem to understand that it may be part of the shopping experience going forward. Square’s data shows 66 percent of shoppers support retailers’ use of AI tools. Just over one-fifth of consumers said they want to use AI for product search.

Those numbers may seem low, given that artificial intelligence already aids personalization and search capabilities for many retailers’ online storefronts. But Roshan Jhunja, head of retail at Square, said part of consumers’ lack of interest in AI could be fueled by the limitations of their understanding about the technology itself.

“There’s a lot of investment going right now towards making [better consumer] experiences, and that, I do believe, is going to boost and elevate consumer confidence and…[retailers’] AI approaches. I without a doubt believe that the acceptance of it is going to increase over time,” he said.

While Square’s data indicates that nearly one-third of consumers support automated checkout, Soti’s data shows that 69 percent of global consumers said retailers did not have enough staff to help resolve issues with self-checkout kiosks in stores.

Shash Anand, SOTI’s senior vice president of product development, said that trend reflects an obsession with online solutions, despite demand for a better experience in brick-and-mortar formats.

“Consumers want more personalization in store, calling for the use of mobile technology to elevate the experience. However, retailers have been so focused on mastering AI’s influence online that it has not yet been translated to in-store tools and tech,” Anand told Sourcing Journal. “Retailers need to build an infrastructure that allows for online benefits to be replicated in store and for new devices to thrive in those physical environments with AI. This is where ensuring you have remote management of your technology is crucial as you may not have the in-store staff IT support across multiple locations. With remote management, issues can be addressed in real-time and with limited downtime.”

Despite consumers’ issues with some in-store technology systems, 35 percent of retailers said they have an interest in speeding up the in-store purchase process, according to Square’s data, which also shows about half of retailers will focus on enhancing in-store experiences.

Those looking to do so should heed caution; SOTI’s insights shows that unresolved issues with technology could be driving consumers away from some retailers—and directly into the clutches of their competitors. One-quarter of responding consumers noted that they have considered shopping with a different retailer for a more convenient in-store technology experience.

Though some consumers have concerns over the efficacy of in-store technology, others said some tasks should be delegated to technology, rather than live staff. Square’s data shows that 29 percent of consumers prefer to use technology to check product inventory in stores, and 26 percent of consumers like using technology to gather information about a product.

Jhunja said he expects consumer—and retailer—interest in automating tasks to rise, which could allow personal interaction to take a front seat in stores.

“The more folks interact with these [tools], I think, the more they’re going to realize just how beneficial they are. It just frees the people up in the process to focus on the things that people are best at, which is building relationships and connecting. Technology can take care of the hard work,” he told Sourcing Journal.

But upping the game on consumer experience extends far beyond the store. The Amazon effect—receiving goods at record speed—has created new expectations around speed and delivery for many consumers.

Per SOTI, nearly three-quarters of consumers indicated that they expect to know where their order is at all times, and 62 percent of shoppers said they shop with brands that deliver goods the quickest.

Though much of retailers’ AI investments and efforts thus far have been concerned with personalization, logistics and delivery could be a major opportunity for retailers. As half of retailers claim that they’ll be investing heavily in their online experiences in 2024, strategizing on same-day or next-day fulfillment could be paramount to consumer retention. SOTI’s data shows that two out of five consumers would look elsewhere for a product if fulfillment is expected to exceed two days.

Though Amazon could be a tough Goliath to beat, some retailers have already begun partnering with startups pedaling AI for same-day delivery and localized warehousing operations.

Anand said investing in the space could marry the physical and digital experience for consumers.

“Supply chain optimization in the retail industry is critical, as consumers now demand real-time information, efficient product availability and rapid delivery in-store and online,” Anand said. “By having visibility into location, signal strength and speed data with critical business information, such as inventory levels and delivery status, AI can ensure that in-store hyper-personalization can replicate the seamlessness consumers expect from online shopping.”