A joint report by Boston Consulting Group (BCG) and Retailers Association of India (RAI), says retailers leveraging advanced analytics and AI across the value chain, will help unlock an opportunity of Rs 400 billion EBITDA (earnings before interest, taxes, depreciation, and amortisation).
“Advanced analytics and AI have transformed retail globally and enabled many large retailers to leapfrog competition and build differentiation,” said Abheek Singhi, senior partner at BCG. “Indian retailers also recognize this opportunity and are optimistic about the potential of advanced analytics and AI to create value”, he added.
The relative importance of use-cases across various retail sub-sectors and examples of global retailers that have adopted AI and advanced analytics to solve business challenges have been highlighted by the report.
“We are seeing a wide spread of use-cases being adopted by Indian retailers across the value-chain. A successful transformation needs more focus around managing people and processes rather than just different algorithms or technologies. Analytics transformation journey, if executed well, will yield enough benefit during its ignition phase to fund the next level of acceleration,” said Namit Puri, managing director at BCG.
The report also notes that there is a significant leeway for improvement across dimensions, despite there being an increased focus on AI and advanced analytics in India. Analytics use-cases have been deployed across the value chain by large brick-and-mortar players and digital-first retailers, with mid-size retailers taking a more pragmatic approach.
“Personalisation, accuracy, speed, and anywhere retail is expected in the modern age. Retailers who are able to utilize AI effectively will be the winners as we go forward. There is significant capability for retailers to be more accurate and many of the retailers are on the path, and on a war footing. Consumers can expect better standards of retailing as days go by, and also a much better offering of merchandise and services,” stated Kumar Rajagopalan, chief executive officer of RAI.
Retail players must build the necessary capabilities required for advanced analytics and AI adoption so that their full potential may be realised, suggests the report. More attention is needed from leadership on change management rather than algorithms and technology since it is a critical component.
