Harnessing AI and big data to transform Middle East’s retail industry landscape

By Saeed Alajou, Senior Sales Director, Enterprise Business

With the increasing dominance of technological advancements in the current era, the global retail industry is witnessing a massive shift in its operations. As the industry embraces a varied range of cutting-edge technologies such as artificial intelligence (AI) and big data analytics, it is redefining customer expectations and the conventional concepts of business operations. According to recent studies, The global artificial intelligence (AI) in retail market size is projected to grow from $9.36 billion in 2024 to $85.07 billion by 2032, at a CAGR of 31.8% from 2024 to 2032. This transformative wave is compelling companies to harness the potential of these cutting-edge technologies to maintain their competitive edge.

One of the most evident trends in this era is the convergence of eCommerce, AI and data analytics, which is driving the evolution of the retail landscape worldwide. In the current omnichannel retail landscape, consumers expect consistency and continuity across various touchpoints, pushing industry players to integrate conversational AI. This integration ensures a seamless experience; for example, customers can begin a conversation with a chatbot while browsing online and effortlessly continue it via a mobile app when they visit a physical store.

However, the potential of the omnichannel approach and conversational AI platforms is not limited to supporting customers. They also provide retailers with valuable insights into customer behaviour across different channels. Conversational AI platforms can generate a vast amount of data from customer interactions, offering retailers valuable insights into consumer preferences, trends, and pain points. By analysing this data, retailers can uncover patterns, identify emerging trends, and optimise their product offerings and marketing strategies accordingly.

Furthermore, AI-driven analytics enable retailers to gauge customer sentiment, allowing them to address issues and enhance satisfaction proactively. These data-driven insights empower retailers to make informed decisions and stay ahead of the curve. Reflecting the vast potential of AI, the retail sector in the Middle East is rapidly adopting this technology, becoming a leading industry in AI investment. Reports indicate that AI spending in the Middle East and Africa (MEA) reached USD 3 billion and is expected to grow to USD 6.4 billion by 2026, with a compound annual growth rate (CAGR) of 29.7 per cent.

The innovation of chatbots and virtual assistants has accelerated the integration of AI technologies in retail, revolutionising customer interactions by adding a human-like touch to digital engagements. These tools enhance the purchasing journey, making it more intuitive and responsive, providing customised and real-time recommendations based on consumer sentiment. However, retailers need to manage expectations of scalability and ensure AI complements rather than replaces human interactions.

Furthermore, integrating big data into retail operations helps understand customer behaviour and preferences. Retailers can leverage vast amounts of data to gain insights into customer needs and tailor their offerings accordingly. By analysing customer-generated data, businesses can conduct predictive analysis to anticipate trends and make informed decisions, keeping them ahead of the curve in offering products and services that resonate with their target audience.

When it comes to the impact of AI integration in the retail sector, one key segment where it is significantly visible is the supply chain. By integrating big data analytics, retailers are achieving more efficiency in their supply chain operations. Predictive analytics powered by AI aids in forecasting demand, optimising inventory levels, reducing waste, and ensuring products are available when and where customers need them. This enhances operational efficiency and customer satisfaction by minimising stockouts and delays.

AI integration supports a customer-centric approach in retail, and it positions technology as a key facilitator in meeting customer demand. Advanced technologies can identify and replicate demographic needs and pinpoint where investment is required to add value. The integration of various AI tools including price-matching technologies, pay-per-click advertising optimisation, and predictive analytics, aids the retailers in focusing on perfecting the customer journey, ensuring a seamless and enjoyable experience from the start to finish.

Although AI is widely embraced across the industry regardless of company size, delivering the best customer service requires empowering employees with the right tools and knowledge. When employees are equipped with AI-driven insights, they can provide more personalised and efficient service, enhancing the overall customer experience. This empowerment also promotes a culture of innovation and continuous improvement within the organization.

Additionally, data integration and integrity are crucial for the effectiveness of AI and big data. Retailers must implement systems that can integrate data from various sources, ensuring that all information is accurate, consistent, and up to date. This collaborative approach allows retailers to offer a unified brand experience across all channels while maintaining data boundaries and complying with privacy regulations.

This widespread adoption of AI technologies in the industry underscores the importance of establishing a robust and adaptable regulatory framework. Given the growing concerns about data privacy and ethical use, retailers must ensure responsible and secure handling of customer data. Stagnant regulations can lead to compliance issues and erode customer trust, and this necessitates current and customer-aligned regulations to maintain a trustworthy data environment.

Another challenge in AI integration is utilising AI and big data to experiment with new ideas and strategies. In retail, embracing calculated risks is crucial for innovation and growth, viewing risks as learning opportunities. Being responsive to evolving customer needs allows retailers to navigate uncertainties and capitalise on opportunities for success.

With AI projected to contribute up to USD 320 billion to the Middle East’s economy by 2030, the region is increasing its investment in technology. This emphasises the need for a holistic approach in retail, integrating AI, big data, and a customer-centric mindset to thrive in the market. The industry players can maintain their competitive edge by focusing on efficiency in supply chain operations, understanding consumer behaviour, and empowering employees.