Artificial Intelligence Integration in Retail: Stocks to Keep an Eye On

In the year 2023, Artificial Intelligence (AI) technology and the corporations responsible for its hardware and software have been the talk of the town. Nonetheless, the retail sector’s embrace of AI remains in its early stages. The potential advantages for retailers seem clear-cut, with AI promising improved workflows for employees and increased product conversions that outweigh the initial technology investments.

Morgan Stanley has highlighted that technology adoption isn’t a linear process, and new technologies usually take roughly a decade to achieve widespread adoption and critical mass. Therefore, productivity enhancements typically lag behind. Nevertheless, the integration of AI in the retail sector could yield immediate benefits due to its close connection to core customers, often just a click away. Here are some retail companies delving into AI integration:

Walmart (NYSE: WMT)

As the largest U.S. retailer, Walmart employs AI to analyze customer preferences and automatically adjust inventories and supply chains accordingly. The retail giant is also extending AI to non-store employees through its “My Assistant” feature, which assists with various tasks, including training, communication, document summarization, and content creation. This generative AI feature is part of Walmart’s broader “Me@Campus” app, compatible with both computers and smartphones.

Fast-Food Restaurants

The fast-food sector is set to benefit from Artificial Intelligence integration, streamlining operations. McDonald’s (MCD) continues to use AI to process drive-thru orders dynamically. Jack in the Box’s (JACK) Del Taco chain employs voice-activated AI for drive-thru orders, and Wingstop (WING) utilizes AI to manage phone orders. Tech leaders Panera Bread and Chipotle (CMG) are also at the forefront of Artificial Intelligence adoption to enhance efficiency in ordering, cooking decisions, and supply management.

Zalando (OTCPK: ZLNDY)

The fashion and tech company has introduced a ChatGPT-powered Assistant in partnership with OpenAI. Zalando’s ChatGPT-integrated personal fashion assistant offers styling suggestions and relevant product links from its store. The Berlin-based firm has laid the foundation for future developments, including fashion and beauty advice or outfit creation.

Etsy (ETSY)

This online retailer is poised to leverage large language AI models to improve search effectiveness, customer engagement, and sales conversions. Advancements in Artificial Intelligence, such as OpenAI’s ChatGPT, enable search engines to understand natural speech, granting users access to Etsy’s unique, long-tail inventory. AI could also facilitate the creation of 3D listings from a few photos and enhance matching algorithms for higher-quality promoted listings/Etsy Ads.

Booking Holdings (BKNG)

The online travel giant has introduced an Artificial Intelligence (AI) Trip Planner in beta to select U.S. travelers via its app. This planner is built upon Booking.com’s existing machine learning models and incorporates OpenAI’s ChatGPT API to create a conversational experience for trip planning. Travelers can ask general or specific questions, receive destination and accommodation recommendations, and even generate itineraries.

Newegg Commerce (NEGG)

The company utilizes artificial intelligence to condense customer reviews and employs ChatGPT to provide concise summaries on product pages, helping shoppers make informed decisions swiftly. Additionally, Newegg offers a new online shopping feature that uses generative AI to summarize customer reviews into brief phrases and paragraphs for an improved shopping experience.

Fiverr International (FVRR)

Fiverr is adopting a hybrid approach, combining internal and external Artificial Intelligence (AI) technologies, including GPT and LLM technology, in an ambitious manner. This Israeli-based company recognizes the tremendous potential of AI and is committed to making it production-ready soon.

Lands’ End (LE)

Lands’ End has developed an internal app that employs ChatGPT to analyze customer data, identifying gaps in its product assortment in real-time. The company expects to see increased conversions as a result of these new AI tools.

Best Buy (BBY)

CEO Corie Barry has highlighted the potential of Windows copilot on Windows 11, incorporating ChatGPT and AI innovations into cloud applications such as PowerPoint, Outlook, and Excel. Best Buy anticipates that the post-pandemic era will bring Artificial Intelligence (AI) models to consumer-level utilization, benefiting its stores.

Expedia (EXPE)

This online travel company reported enhanced performance in the first quarter due to increased testing and accelerated deployment of Artificial Intelligence (AI) and machine learning, including the integration of ChatGPT into the iOS experience. Analysts anticipate further positive updates on AI benefits during the Q2 earnings call.

In addition to these retailers, other companies that can be loosely categorized as retail, such as Amazon (AMZN), eBay (EBAY), and Uber Technologies (UBER), are also reaping the rewards of AI integration.

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