Boosting the Success and Return on Investment of AI Deployments in Retail 

By Peter Curran, GM of Commerce, Coveo

Retailers should be encouraged by the rosier economic outlook forecasted for 2025. As inflation declines, consumer confidence appears to be on the rise. While shopper optimism varies from region to region, economists estimate that consumer spending in the U.S. grew at a 3.3% annualised rate in the fourth quarter of 2024 after accelerating at a 3.7% pace in the July to September quarter. In the UK, retail sales accelerated 3.2% YoY in December, up from 1.9% in the previous year, according to the British Retail Consortium and KPMG.

Retailers have plenty to be optimistic about, but adopting GenAI brings challenges, opportunities and some opposition. Many retailers are still hesitant to adopt GenAI because of the potential for bad outcomes. For example, well-known issues with hallucinations could result in the GenAI tool providing product recommendations which could result in consumer harm – and repercussions for the brand (and the consumer). And, there are also plenty of examples of GenAI tools and chatbots going rogue with inaccurate or even embarrassing responses to user queries which may negatively impact the brand, leading to a flurry of bad press and a decline in customer loyalty.

As the experimental phase and hype around GenAI fade, businesses demand tangible, measurable ROI from their investments. This year marks a pivotal shift from pilot projects to large-scale GenAI implementations, emphasising practical use cases that drive concrete business results. Time-to-ROI may take longer than expected, but the long-term benefits justify the initial investment of time and resources.

The ‘Show me the Value’ Era of GenAI

There’s a right way and wrong way to leverage GenAI; therefore, brands should be bold, realistic and strategic about how they’ll leverage it so as not to derail the journey to return-on-investment. For example, many retailers and organisations have already deployed GenAI-powered chatbots. This isn’t a new strategy but really a rebranding of 2000s-era chat bots as digital agents and hoping they’ll be more effective. In fact, chatbots may further degrade service, negatively impacting the end-to-end customer experience brands deliver. GenAI-powered chatbots may sound like a good investment but they are just one example of an ineffective way to leverage GenAI’s inherent abilities.

Retailers should consider their content strategies not just as an empty way to drive traffic but as a more meaningful way to engage customers via generative experiences. This requires brands to develop and deliver authentic and well-structured content that educates and informs buyers. For example, some of our B2B customers leverage Generative Answering to provide more proactive customer support by anticipating buyers’ questions before they’re even asked. This allows them to keep support costs down while delivering better customer experiences.

The Rise of Conversational Commerce

As GenAI continues to transform the commerce landscape, integrating conversational commerce is proving to be the game changer that has the potential to maximise the impact of a retailer’s AI-driven initiatives. By blending real-time, personalised customer interactions with the power of GenAI, retailers can drive higher engagement, streamline purchasing processes, and foster stronger customer relationships. 

Today’s consumers demand more interactive, human-like shopping experiences, blending the lines between online and offline channels, which is why 2025 is the year conversational commerce will go mainstream. AI-powered chatbots, voice assistants, and personalised recommendations that help guide customers seamlessly through their journey while offering real-time support, will prove to be much more effective. Why?  Because thanks to Natural Language Processing (NLP), GenAI-powered search can process more conversational, long-tail queries like “I’m looking for a red dress for a summer wedding” or “Where can I find a waterproof jacket under $100?”. Conversational commerce goes far beyond simple keyword searches, offering results based on the intent behind the query to allow customers to search in a more natural way, improving their experience and leading to faster – and more relevant — product discovery.

Some of the world’s biggest brands are leveraging conversational commerce in novel ways to deliver customers the experiences they expect and demand. H&M has integrated a chatbot into their website and mobile app to help customers find specific items, suggest outfits, and facilitate the purchase process. L’Oréal is another good example. The hair product brand uses AI-powered assistants to assist customers with beauty product recommendations based on their skin tone, preferences, and needs.

Our customer Freedom, a leading furniture and homeware retailer with over 60 store locations across Australia and New Zealand, recently spoke at NRF’s Big Show about how they’ll be using Coveo’s AI Platform™ to enable them to control their rapid expansion from 15,000 core products to 50,000 marketplace products. Data management issues had prevented them from properly integrating these new products into the online search experience. But within weeks after implementation, they were able to properly showcase these new products, leading to an uplift of 15% in sessions with search, resulting in a 5% increase in customer average order value (AOV). This use case is a good example of how AI-driven search can transform the experience and product discovery in today’s commerce businesses.

The GenAI-driven Retail Transformation

GenAI can reshape today’s commerce businesses by making interactions more personalised, efficient, and engaging. It enables businesses to offer round-the-clock, intelligent customer service, streamline shopping experiences, and gather valuable insights to drive sales. Instead of replacing search, AI and GenAI enhance product discovery transforming the way customers engage with brands, leading to more satisfying, efficient, and dynamic shopping experiences.

Contributor: Peter Curran, GM of Commerce, Coveo

Peter Curran is the General Manager of Commerce at Coveo. Over the years, he has worked across various eCommerce business models, categories, and company sizes. Peter co-founded and acted as President and Head of Sales for Cirrus10, a Web Content Management and Ecommerce Technology consultancy. Cirrus10 was acquired by Lucidworks in 2019. At Lucidworks, he served as GM of Commerce, SVP Go to Market, and CRO. Peter then managed his own strategic consulting firm, implementing and tuning Constructor.io and OpenSearch. With 30 years of experience in enterprise technology, Peter has dedicated the last 15 years to enhancing product discovery across diverse industries, use cases, and platforms.