High-Quality Data is the Key to Unlocking the Power of Generative AI in Retail


When generative AI burst into the public sphere last year — in the form of Microsoft and OpenAI’s ChatGPT — it gained 100 million active users over the course of two months. That made it the fastest-growing software application in human history.

At first, conversation around the technology would have led you to believe its inventors had cured all of society’s ills. Or, at the very least, its inefficiencies. However, it quickly became clear that it wasn’t as simple as that. Users began to see its shortcomings, whether they were related to difficulty understanding context, an inability to match human’s creative capabilities or straight-up factual errors (which ranged from fully incorrect to full-on dangerous). 

The reason for these shortcomings was fairly simple. It came down to coding: Because generative AI is built using pre-existing data and rules, it can only produce results that are similar to, or derivative of, things that have been done or said before. In short, generative AI cannot generate truly new ideas or solutions. 

This foundational truth is a critical reason why many retailers need to rethink their approach to the AI future. Artificial intelligence alone won’t unlock your organization’s potential. In fact, the secret to your success is already in your grasp. 


Let’s talk about your data. 

Building a Michelin-Star Customer Experience

Without the right data — and enough of it — all the AI tools in the world won’t lead you to a single meaningful customer insight. Think of a chef preparing a gourmet dish. To create a high-quality end product they first need great ingredients. Generative AI is no different. Without quality input, you’ll never garner any quality output. Strong data is vital.

For retailers, this presents a new kind of challenge, one that is uniquely modern. Because while good data can help to create the kind of personalized experiences that drive business growth, offer value to the consumer and build lasting customer loyalty, there’s a catch — consumers are hesitant about sharing their data.

In fact, in a recent SAP Emarsys study we found that nearly half of 10,000 surveyed global consumers (46%) were wary of the role AI plays in their retail experiences. Despite this, interestingly, those same consumers very much like to benefit from the convenience, value and brand connection that comes from sharing their data. For instance: 

  • Consumers said they would be more likely to buy from a brand with personalized extras (62%), personalized recommendations (63%), personalized loyalty programs (72%) and personalized discount codes (77%); and
  • 76% of consumers also said they preferred personalized marketing communications from brands, with 73% saying they wanted to know that a brand “gets them” as a person.

In essence, the fears and concerns of consumers conflict directly with their desire for individualized, value-driven experiences supported by AI. This means brands must speak out and help consumers make the connection between their data and artificial intelligence so they can fully understand the benefits of its use. 

Unlocking Distinct AI Benefits  

Ultimately, the value of AI for retailers can be absolutely transformative. There are two primary, and intertwined, reasons for this. 

1. Reducing costs: Let’s take chatbots as an example. Many of them still aren’t quite where we want them to be quality-wise, but it’s undeniable that the vision of what they’re capable of is starting to come into focus. For instance, the cost of an agent interaction with a customer has historically rested somewhere between $5 and $10. With an AI-based digital assistant available to answer the same customer questions, the cost of an interaction drops to less than 10 cents.

I first saw this stat a few years ago, but it’s always stuck with me. That’s because it shows the tremendous impact and value that AI can bring to the industry. It’s the kind of impact that won’t directly create more money but will reduce costs, help build customer loyalty and lead to faster return on investment overall, especially for companies with high call volumes. 

2. Increasing revenue: There’s also a gold mine here that AI can help businesses to uncover. Imagine turning product recommendations from, “If you like this fishing rod, you would probably like this bait,” to “If you like this fishing rod, you would probably like to go camping in this particular area during this particular time of the year; you could even sign up for this class to do it better and get a rental RV and a canoe from this place to ferry you along on your fishing journey.” 

That’s what’s possible with generative AI. As long as you have good, solid data on customer preferences and buying histories, you can take your game to the next level. It can help you become an everything-for-everyone retailer. It can help you build loyalty and dedication — and an all-in-one platform that will leave customers feeling satisfied. It will set your sales on a course skyward, up and to the right for years to come. 

Embracing the Rapidly Approaching Future

You can’t just take for granted that AI will serve as a magic potion for your company’s success. It won’t all come together on its own. You need to have a consistent and dedicated data strategy to embrace its myriad possibilities. Start by instituting:

  • Executive sponsorship that’s devoted to driving AI innovation in the company;
  • Data governance that lays out firm ground rules across your user base;
  • Data quality that gives you the standardization and consistency you need to make decisions; and
  • Trained employees who know how to use and process everything to make an impact.

All in all, the ultimate goal should be giving customers the best experience you can possibly offer. In a fast-paced, margin-sensitive industry like retail, artificial intelligence can enable that, with real-time analytics poised to help optimize the entire consumer journey. All you need is the right data — just like a Michelin Star chef needs the right ingredients. Then, you can really get cooking and find the exact recipe that works for you. Start exploring the possibilities today so you can unlock your data, maximize its potential and truly transform your business.

As Managing Director for SAP Labs U.S., Yaad Oren is responsible for leading location strategy, ecosystem engagement, operations, communications and employee engagement for SAP’s approximately 5,500 development employees in more than 20 offices across the U.S., SAP’s largest cloud addressable market. Oren also leads the SAP Innovation Center Network, a global R&D organization focused on addressing the future needs of SAP’s enterprise customers by exploring emerging technologies and building early-stage products.Since joining SAP in 2005, Oren has held various leadership roles in development and product management of several product groups. Prior to his current roles, Oren was responsible for the SAP Technology and Innovation strategy, where he helped define the company’s technology direction and directed strategic technology-focused initiatives. He holds a Bachelor of Science in Industrial Engineering and his MBA from Tel Aviv University in Tel Aviv, Israel.

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