The explosion of data in recent years has pushed advanced analytics and AI to the forefront of technology in the retail industry, says a report by Boston Consulting Group (BCG) and Retailers Association of India (RAI). Although there has been increasing focus on advanced analytics and AI in India, the report points out, there is significant headroom for improvement across dimensions.
“Despite global retail experiencing a consumption slow-down, India’s retail market is in a shining spot and well on path to hit the $1-trillion mark by 2027,” says the report titled Rs 400 Bn EBITDA Opportunity with Advanced Analytics and AI in Retail.
The report highlights innovative ways in which retailers globally leverage advanced analytics and AI across the value chain to unlock value. It also sheds light on the maturity level and extent of current adoption of advanced analytics and AI by Indian retailers, providing a roadmap for Indian retailers on how to get started, the right approach, capabilities, and partnerships needed to ensure successful adoption and value realization.
“Advanced analytics and AI have transformed retail globally and enabled many large retailers to leapfrog competition and build differentiation. Indian retailers also recognize this opportunity and are optimistic about the potential of advanced analytics and AI to create value. If leveraged well and at scale, Indian retailers can unlock Rs 400 billion incremental EBITDA with advanced analytics and AI over the next five years,” says Abheek Singhi, MD and senior partner, BCG.
The report also highlights the varying relative importance of use-cases across different retail sub-sectors and illustrates select examples of global retail leaders that have successfully adopted advanced analytics and AI to solve critical business challenges and demonstrated significant value. Additionally, it captures the key learnings from the journey of these global retail leaders that can serve as a guiding point for Indian retailers.
Indian retailers have already created a significant impact with analytics and AI, driving growth and profit objectives through multiple use-cases across the retail value chain. Large brick-and-mortar players and digital-first retailers have deployed analytics use-cases across the value chain, while mid-size retailers have taken a pragmatic approach with a few high-impact ones, it says.
“Deploying a balanced approach between in-house and external resourcing will be crucial for Indian retailers to effectively execute long-term transformation. While India currently lags multiple Asian countries in advanced analytics and AI maturity, particularly in technology, people & skills, and data governance, there are enough and more Indian retailers who are truly disrupting the retail industry and creating huge value by leveraging advanced analytics,” states the report.
“We are seeing a wide spread of use-cases being adopted by Indian retailers across the value-chain. We have seen in our work that it is important to adopt an approach of starting small and scale iteratively. 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” explained Namit Puri, MD and partner, BCG.
“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,” opined Kumar Rajagopalan, CEO, RAI.
