Canadian retailers are increasingly turning to generative Artificial Intelligence (AI) technology to boost productivity, predict demand, and personalize customer experiences, according to a new survey by KPMG in Canada. The research, which surveyed executives from 135 Canadian retailers across various sectors, reveals a strong consensus on the necessity of AI integration for staying competitive.
The survey indicates that more than 80 percent of respondents believe investing in generative AI is crucial for maintaining a competitive edge. Similarly, 81 percent of executives agree on the need to shift to a generative AI operating model within the next year.
Currently, nearly four in ten (38 percent) of the surveyed retailers have already implemented some form of generative AI, with another 39 percent planning to do so within the next six months. These retailers primarily use generative AI for detecting fraud, predicting product demand, and offering personalized shopping experiences.
Kostya Polyakov, partner and national industry leader of KPMG in Canada’s Consumer and Retail practice, emphasized the technology’s importance, stating, “It is clear Canadian retailers see generative AI as critical to their futures. The challenge is identifying use cases that add value to organizations since there are a myriad of ways retailers can use the technology to become more efficient, productive, and profitable.”
Generative AI applications cited by respondents include detecting fraudulent transactions (69 percent), optimizing inventory levels (68 percent), offering personalized product recommendations (67 percent), and enhancing product search engines (67 percent).
Despite the enthusiasm for AI, retailers recognize the need for responsible implementation. Peter Hughes, National Customer Experience Practice Leader at KPMG in Canada, highlighted potential risks, noting, “Retailers need to think carefully about how they’re using the technology because it could create reputational, legal, and financial risks if not used properly and responsibly. Having proper guardrails and controls around the technology is a must.”
The survey also underscores the potential of generative AI in supply chain management, although less than half (46 percent) of the respondents have applied the technology in this area. Among those who have or plan to implement AI in their supply chains, primary motivations include unlocking prescriptive analytics capabilities and generating accurate sales predictions.
However, challenges persist, particularly regarding data quality and management. Two-thirds of respondents identified non-validated, inaccurate data inputs as a significant hurdle, which can lead to inaccurate AI outputs. Additionally, 71 percent of respondents reported difficulties accessing or leveraging data for AI implementation.
Polyakov noted, “Retailers have access to enormous amounts of data – including customer data, sales data, and supplier data – and that data can be leveraged for using generative AI. But to make that data useful for a generative AI system, retailers must make sure it’s clean, organized, and structured. That’s a crucial part of any successful generative AI implementation.”
The survey, conducted by KPMG in Canada using Sago’s premier business research panel, included executive-level decision-makers at Canadian retail companies with annual gross revenues ranging from $200 million to over $1 billion. The respondents represent various sectors, including grocery, health and beauty, and clothing, with a significant proportion based in Ontario and Quebec.
