Artificial intelligence has the potential to bring in over $580 billion in extra profits for Amazon and Walmart according to new research from global research and advisory firm IHL Group.
In total, the top 212 North American public retailers and restaurants could see over $1.5 trillion in additional financial impact through 2029 — with Walmart and Amazon accounting for over $580 billion, or 38.5% of the total.
Behind Walmart and Amazon for financial impact are CVS, Costco, Kroger, The Home Depot, and Target. When it comes to overall AI readiness, the same two top the chart, but the rest of the list varies slightly, with eBay and Rakuten joining the ranks for readiness (replacing CVS and Costco).
“AI is already transforming the retail market behind the scenes with traditional AI/ML improvements. Generative AI simply adds rocket fuel to that potential financial impact,” said Greg Buzek, president of IHL Group.
In addition, IHL forecasts the worldwide financial impact of AI from 2022-2029 to be $1.9 trillion, or 20.6% of the total, which breaks down in the following ways:
- Sales potential increases through personalization and better product bundling at $1.1 trillion
- Improved gross margins at $412 billion
- Lower sales and general administrative costs at $391 billion
However, for North America these numbers are equal to $370.1 billion. Here is the breakdown:
- Sales potential increases through personalization and better product bundling at $214.4 billion
- Improved gross margins at $78.9 billion
- Lower sales and general administrative costs at $76.8 billion
“This financial impact is a factor of the company’s data and structural readiness to take advantage of the advancements as well as scale and free cash flow to invest in the technologies,” said Buzek. “The real exponential impact comes when generative AI is added onto the hard work companies have done to clean, tag, and manage their core data in customer, inventory, and product data for traditional AI/ML applications.”
Buzek listed the top seven categories with the largest impact benefits (how they are used for increases in sales or improvement in costs), which includes: 1. B2C e-commerce, 2. analytics (prescriptive, predictive, multichannel), 3. technology infrastructure management, 4. store-level ordering and inventory management, 5. inventory optimization, 6. loss prevention, and 7. assortment planning/allocation.
About the research
The AI Readiness Index (AIR) research from IHL Group ranks the AI readiness for 212 top public retailers and restaurants with potential financial impact through 2029.
The Retail AI Readiness Index provides an AI readiness score comparison as well as the potential financial impact for individual companies from sales growth, gross margin improvement, and sales/general administrative cost improvement.
The research includes rankings for the top seven companies in the following segments: fast moving consumer goods (grocery, mass merchants, warehouse clubs), apparel/shoes, hard goods (home improvement, electronics, pets, sporting goods, furniture), health and beauty (pharmacy and cosmetics), restaurant chains (fast food and table service), and pure play ecommerce companies (those with all online sales or few physical stores compared to total sales) as well as a listing of 212 public companies in total.
