Ahead of NRF’s (National Retail Federation) Big Show in New York, Avanade’s AI Readiness Report highlights the challenges facing retailers in the AI race for survival, competitive advantage and market share through enhanced customer experiences. Yet, while the arrival of Microsoft’s new retail AI solutions will address many industry struggles, Avanade’s research exposes significant roadblocks to retailers’ AI adoption, particularly surrounding the absence of responsible AI guidelines and inadequate employee training.

Retailers are fully aware that they must embrace AI, as they are increasingly seeing this expectation in their customers. Avanade’s research shows that almost 90% of retailers believe their customers are ready for AI-driven interactions and processes. They also recognize the transformative potential of their data when combined with AI, so much so that investment in data and analytics platforms is ranked as their top priority for 2024. But, for many, the challenge lies in implementing strategic measures to support front-line workers and drive actionable insights from AI.

Therefore, Microsoft’s new AI solutions will be welcome news and set a new standard for industry-specific generative AI and data capabilities. These include:

1. copilot template for store operations on Azure OpenAI Service
2. copilot template for personalized shopping on Azure OpenAI Service
3. Retail data solutions in Microsoft Fabric

"With these solutions, Microsoft is offering something genuinely bold and new – AI capabilities that are specifically built to address precise industry pain points," stated Corine Vives, Avanade’s Global Retail and Consumer Goods Industry Lead. "If retailers believe customers are demanding AI, they have no choice but to deliver it, or shoppers will go elsewhere. It’s not a nice-to-have. Overnight, expectations and experiences of customers have changed, and retailers must keep up. However, our research shows a significant gap in the readiness of retailers. While they might be confident about how prepared they are, our data highlights big obstacles to overcome. The path to readiness will require concerted efforts from retailers."

Key findings from Avanade’s AI Readiness Report include:

Optimistic Outlook, Unprepared Reality: 94% of retailers express confidence in their ability to harness AI benefits faster than their competitors. However, only half of them have implemented strategic measures for managing human resources, workforce planning and training—actions that are essential for driving operational efficiency as retailers scale up the adoption of generative AI technologies.

Customer Expectations vs. Reality: While retailers believe their customers are ready for AI (above the average across all industries, which was 85%) the report also reveals that across all industries almost all (98%) leaders agree that significant support will be required to onboard/train employees to use generative AI tools, with 50% indicating that this training effort will demand substantial support.

Governance Gaps: Only half of retailers report having implemented a complete set of guidelines and policies to ensure the responsible use of AI, highlighting a critical need for a robust and scalable governance framework. This is of paramount importance, considering the responsibility that comes with using AI ethically. A misstep in this regard could prove severe, especially given the growing concerns from consumers as to how AI is being used.

At NRF, Avanade will share these and other retail-specific AI readiness insights with clients and attendees to help prepare them to harness AI and drive competitive advantage. Avanade will also showcase a cutting-edge array of AI retail demos which will redefine the future of retail.

Demo highlights include generative AI-powered shopping experiences, smart devices and AI video analytics to enhance store operations, AI-based solutions for in-store employees and much more. The showcase also spotlights an intelligent AI-infused commerce platform enabling transactions anywhere and a proprietary generative AI retail data platform.

For media inquiries, in-person briefings and demos at NRF, or to schedule a virtual demo in the coming weeks please contact: Audrey.Carl@avanade.com

Avanade is the leading provider of innovative digital, cloud and advisory services, industry solutions and design-led experiences across the Microsoft ecosystem. Every day, our 60,000 professionals in 26 countries make a genuine human impact for our clients, their employees and their customers.

We have been recognized, together with our parent Accenture, as Microsoft’s Global SI Partner of the Year more than any other company. With the most Microsoft certifications (60,000+) and 18 (out of 18) Gold-level Microsoft competencies, we are uniquely positioned to help businesses grow and solve their toughest challenges.

We are a people first company, committed to providing an inclusive workplace where employees feel comfortable being their authentic selves. As a responsible business, we are building a sustainable world and helping young people from underrepresented communities fulfill their potential.

Majority owned by Accenture, Avanade was founded in 2000 by Accenture LLP and Microsoft Corporation. Learn more at www.avanade.com.