AI is no longer just a buzzword in retail. It’s a tool retailers are increasingly deploying to transform their business operations.
Major retailers are partnering with tech giants such as Google, Amazon (AMZN), and Nvidia as they explore AI’s potential. At least at the moment, the technology’s biggest impact is being felt on the supply side, not the point-of-sale.
Carrie Tharp, Google Cloud’s vice president of global solutions and industries, said this month that AI’s evolution, particularly its shift from text-based applications to multi-modal tools that process images and videos, can increasingly boost retailers’ bottom lines.
“What this looks like for businesses is brand new experiences,” she said at the National Retail Federation (NRF) Retail’s Big Show in New York. AI-driven marketing will gather deeper insights into consumer behavior to enhance personalization, Tharp said. But the real value, she said, is in improving internal processes.
Take Home Depot (HD). The home improvement giant has tested pilot projects to create hyper-personalized experiences for customers. While there are customer-facing benefits, the focus remains largely operational. AI is streamlining operations and optimizing Home Depot’s supply chain — which ultimately leads to better experiences for customers, whether or not they see it.
Tharp emphasized the importance of equipping store associates and corporate teams with AI tools to drive efficiency. AI is enhancing speed and reducing human error by automating routine tasks, allowing workers to focus on more critical decisions.
Google’s calling
AI’s growing value to retailers was evident during discussions at this month’s NRF Big Show. Companies are eager to optimize their core operations — meaning that’s where they’re most willing to spend money on AI.
Tharp highlighted how Google’s (GOOGL) AI products are being integrated into the retail journey behind-the-scenes. Google’s advancements in search and consumer metrics allow retailers to track up to 10 touch points, or the interactions a customer makes with an item or product before they make a purchase decision. With AI-powered systems, retailers can predict what products will be in demand before they go out of stock
“This has important implications for supply chain optimization and demand forecasting, two areas where AI capabilities can be especially useful,” Tharp said.
Quantum AI is expected to take retail to even greater heights — although Tharp stressed the importance of mastering basic AI use cases first. “The priority is not only to enhance customer experiences,” she said, “but also make back-end operations more nimble and responsive to changing market conditions.”
Domino’s and Dollar Tree got the AI bug, too
Fast food chains and discount retailers are also catching on.
Greg Fiddes, Google’s director of Chrome enterprise software partnerships, shared at NRF’s Big Show how Chrome OS, a cloud-based operating system, is being used to streamline in-store operations at pizza giant Domino’s — a chain that touted using AI to make pizzas “before people ordered them” last year.
Chrome OS now essentially runs interactive kiosks and digital signage across Domino’s more than 6,700 U.S. locations.
Fiddes also noted the security AI provides. The software has never experienced a ransomware attack such as the one seen by CrowdStrike last year. This is crucial during peak times such as Super Bowl Sunday , when Domino’s delivers up to two million pizzas.
“If you don’t make, take or bake the pizzas, you support those who do,” Michael Crumley, Domino’s manager of store technology, said of TK. “The ability to remotely manage and support devices is a major benefit, especially for a large retail chain with multiple locations.”
Other big food chains such as Chick-fil-A, McDonald’s, and Wendy’s are using some form of AI, all with the goal of feeding customers faster. Retail giant Costco also relies on Chrome OS to manage operations.
Dollar Tree (DLTR) is using AI and low-Earth orbit (LEO) satellite technology to streamline operations. This is especially helpful in rural areas where connectivity can be challenging.
The move could help Dollar Tree better handle operations as it considers a sale of its Family Dollar brand.
Nvidia’s AI pitch to retailers
Retailers are already using AI autopilot systems — in which AI handles routine tasks and humans intervene only in critical situations — said Andrew Sun, who heads Nvidia’s (NVDA) AI for retail division.
“No one ever feels like you have enough time to do the very manual work, moving a box off a truck, making sure it’s unpacked, getting it onto the shelf at the right price, and serving the customer,” Sun said, noting that the shift could simplify a hard job in a high turnover industry.
The AI chip maker is moving beyond gaming and entertainment to look at how AI can make more efficient use of labor and reduce human error – two key factors that can make or break a supply chain.
The real win for the retail industry might not be in delivering more sophisticated customer experiences, but in building a stronger, more resilient infrastructure.
For now, AI’s on the supply side, but as the tech matures, it will seep more substantially into every customer interaction and companies lagging behind in AI adoption may be in for a rude awakening.
“While companies are making strides, the majority are still medium to slow followers in AI adoption,” said Jerry Sheldon, vice president at global research firm IHL Services. “This gap could lead to significant competitive advantages for early adopters and heavy investors.”