AI in retail and hospitality: the manager's perspective

2 minute read
As AI reshapes retail and hospitality, managers are optimistic but concerned. Research from frontline enablement solution company Axonify highlights the push for personalised customer experiences, safety enhancements and the crucial role of leadership

Illustration of a robot riding in a retail trolley

In the ever-evolving landscape of retail and hospitality the integration of artificial intelligence (AI) and automation technologies is rapidly reshaping operations, according to research with frontline managers.

Frontline enablement solution company Axonify’s research with 500 frontline managers in companies with more than 200 workers in the UK's retail and hospitality sectors finds 73% are comfortable with introducing new technologies like AI into their operations, while the same number believe AI can improve the customer/guest experience.

In 2024 managers plan to automate a variety of functions. Some 62% aim to implement automation in ordering, product returns and checkout processes, while 55% will use it for inventory management. Additionally, over half (56%) plan to use automation in customer loyalty functions, scheduling, employee training and organisational learning.

Carol Leaman, CEO and co-founder of Axonify, says this is an important shift: “Our data shows that managers are actively driving the operational consistency and efficiency that retailers and hospitality organisations desperately need. Emerging technologies and automation are among the biggest factors impacting operations across the board. Cross-sector AI is becoming increasingly prevalent and findings from our survey reveal that, while most managers today feel comfortable introducing emerging technologies to their staff, there’s still a need for comprehensive training and clear communication around new tech like AI to ensure companies and workers can reap the full benefits.”

Indeed, the research shows that, despite the overall positive sentiment, concerns about AI linger among managers, with 59% worrying about job displacement, software bias and privacy issues. Other concerns are that  AI could speed up or slow down operations, create confusion around job roles and decrease job satisfaction.

Perhaps this is why 43% of retail and hospitality companies do not plan to automate functions in-store next year. The barriers cited include a lack of understanding of what AI is and can do (63%), limited time and resources (59%), lack of motivation to learn a new technology (59%) and an unknown return on investment (60%).

Staffing remains a pressing operational issue, with 65% of managers identifying hiring as a critical challenge. This aligns with previous findings that highlighted the burden on managers regarding seasonal hiring. Other concerns include updating training materials (61%), integrating more technology (56%) and addressing theft and violence (55%).

Worsening operational challenges are having a negative impact in three core areas, according to the research:

  1. Customer and guest experience: Over half of the managers are worried about the impact of operational challenges on customer and guest experience. The post-pandemic era has seen a rise in customer expectations, with a demand for more well-versed staff, quicker checkout options and more secure environments. There is a pressing need to adapt to customer desires and the integration. AI and automation could play a role in enhancing service quality.
  2. Safety and security: Managers are increasingly concerned about safety and security, with 72% more worried about the personal safety of their workers and customers today than in the past. This underscores the importance of implementing technologies that can ensure a safer, more secure customer and employee experience.
  3. Manager empowerment and leadership: Managers are actively engaging with senior leadership, with 76% feeling supported in making business improvements. This empowerment, including training, learning and upskilling opportunities, is crucial in navigating the challenges and opportunities presented by AI and automation.

The report's findings suggest a cautious yet optimistic approach towards AI and automation in retail and hospitality. Managers recognise the potential efficiencies and improvements AI can bring but they are also acutely aware of the challenges, such as the need for adequate training, overcoming resistance to change and addressing ethical concerns. The role of managers in navigating the transition cannot be overstated.

While the introduction of AI in retail and hospitality could greatly improve customer experiences and potentially alleviate the pressures of staffing shortages, particularly during peak seasons, the need for empathetic customer service and the human touch in hospitality and retail will likely always remain a cornerstone of these industries.

Published 22 November 2023
Enjoyed this story?
Sign up for our newsletter here.