NEW YORK – November 13, 2024 –Generative AI continues to change the retail industry, enhancing customer interactions by providing personalized, efficient, and engaging shopping experiences. Yet many shoppers don’t realize when they are encountering it. A Bain & Company survey of 700 online shoppers in the US found 71% of consumers say they are not aware of having used generative AI in their online shopping even though most have recently shopped with retailers where they are likely to have encountered it. But despite low awareness, customers are optimistic about the impact of generative AI, with roughly half seeing significant or transformative potential and many willing to provide personal data for better personalized recommendations.

The potential risk of generative AI turns out to be less a barrier to usage than expected. Respondents say their top reasons for not using generative AI tools while shopping online are because they’re satisfied with current methods (47%) and don’t see the need for new tools (39%). Just 22% said it’s because they don’t trust generative AI tools.

“The online shopping experience has been so finely tuned over the past couple decades that retailers’ near-term generative AI priorities should be about complementing existing shopping habits, rather than replacing them,” said Merritt Robinson, partner and global head of design for the Bain Innovation & Design team. “It’s about enhancing, not disrupting, shopping flows. It may be somewhat counterintuitive, but this includes moving beyond some of the more explicit tools, like chatbots, to more passive solutions, such as summarized reviews on product pages. Much of the magic will then come from more proactive solutions, such as personalized content, tone of voice, and anticipatory service in customer interactions. Generative AI will help retailers stay in touch in more natural and helpful ways.”

Generative AI may hold new potential for customer data collection

Bain’s research suggests customers understand generative AI’s potential to personalize their experiences and that because of that, they’re more willing to exchange data for better personalized recommendations than they might have been in other contexts.

Most shoppers say they would be willing to share data on personal interests, such as hobbies and favorite products, and demographics. In exchange, customers say they expect generative AI to help with the discovery and decision-making phases of their purchasing journey, specifically by finding products aligned with their timing, context, past purchases, and preferences.

Building and maintaining shopper trust is essential

Retailers are asking customers to join an experiment, so building and maintaining trust is essential. Brand reputation goes a long way: 41% of customers say they would feel comfortable using a generative AI tool from a brand they trust.

Generative AI is still subject to hallucinations though, and these kinds of mistakes erode trust. More than half the customers we surveyed say the biggest negative impacts to user experience are inaccurate product information (56% say it’s very or extremely negative) and obvious errors (57%). This is yet another reason to be transparent with customers about experimental uses of generative AI and to lean into passive applications, which can be more closely controlled.

“Generative AI provides a bridge to a more interactive and personalized retail experience,” said Mikey Vu, partner and head of Bain’s Retail AI practice. “Some executives are understandably concerned about its tendency to deliver inaccurate information and the impact that can have on customer relationships. That’s why careful and thoughtful product design is pivotal. Setting expectations is key: ‘should generative AI be perfect, or should it be reliably better than today’s experience?’ In practice, we’ve actually seen generative AI’s customer responses be more accurate, on average, than those from human agents. Retailers who prioritize trust, transparency, and adaptability will unlock new levels of engagement and loyalty among their customers.”

Editor's Note: For more information or to arrange an interview, please contact: Katie Ware, Bain & Company, tel. +1 646 562 8107, email: katie.ware@bain.com.

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