How AI is transforming retail in Australia

The use of AI in the retail sector in Australia is growing rapidly, bringing significant benefits to businesses in terms of efficiency, customer engagement and operational effectiveness.

In fact, Generative AI is projected to contribute between $45 billion and $115 billion annually to the Australian economy by 2030.

New research by Statista has revealed that companies in the retail sector using artificial intelligence (AI) and machine learning (ML) performed better than their competitors. In both 2023 and 2024, retail companies implementing these technologies experienced double-digit sales growth compared to previous years. Likewise, their annual profit increased by approximately eight percent, surpassing the performance of retailers who did not adopt AI or ML solutions.

But sourcing the skilled talent necessary to leverage and implement AI technology is likely to be costly and time-consuming.

A recent survey that we at FDM conducted earlier this year revealed some interesting insights about the state of AI adoption and the main barriers to adoption for organisations.

• 64% organisations are already using AI
• Automation for operational efficiency and customer service are the top AI use cases for 61% of organisations

Customer service

Retailers using AI have reported notable improvements in sales and customer satisfaction.

FDM Consultant Shriya Sriram works as a Business Analyst (BA) for a luxury retail client. She believes –

On the customer-facing side, AI has the ability to elevate the retail experience by offering personalised product recommendations and faster/convenient checkout processes. It is quite exciting to see how much our world will change in the upcoming years.

AI can analyse data from various touchpoints, such as physical stores, online platforms and loyalty programs to personalise customer interactions.

For instance, Sephora’s AI-driven tools, such as Colour IQ and Lip IQ, can scan a customer’s face and offer personalised makeup recommendations like foundations and lipsticks. This creates an enhanced customer experience and boosts sales​.

Similarly, AI-powered chatbots can improve customer experience by handling product inquiries, order tracking and basic troubleshooting, thereby freeing up human resources for more complex tasks. However, retailers must ensure that these chatbots are well-trained to provide accurate responses and avoid frustrating customers with irrelevant instructions.

Shriya says –

My team is currently exploring possibilities with auto-generated meeting minutes and translations into various APAC languages using AI. At an overall company level, we are actively incorporating other innovative solutions as well at various stages in the product lifecycle. 

Operational efficiency

AI has been seen to boost operational efficiency by automating tasks and optimising processes. Autonomous AI systems are used for inventory management, detecting pricing errors and facilitating dynamic pricing strategies based on demand and competition.

According to Shriya –

Within the retail industry in particular, AI can reshape phases throughout the clothing lifecycle. For instance, it could determine the optimal inventory levels, ensuring efficient stock management and minimising both depleted stock and excess inventory. It can also optimise delivery routes, reducing operational costs and improving timely deliveries.

Shweta Bhatia is another FDM Consultant working as a BA for a global retail client. She is currently on assignment where the client is experimenting with AI-powered inventory automation technology to improve in-stock availability and managing the store transfer in line with the incremental sales in respective stores.

Speaking about the scope of AI in the future Shweta said –

I am excited to see the progress in AI technology regarding how it takes over and automates my tedious tasks to increase efficiency with no errors.

Retailers like Target and Coles use AI for predictive analytics to manage inventory and forecast demand, which helps reduce overstocking and stockouts​.

Shweta mentions the work her company is doing with AI –

My team is currently experimenting to automate AI powered inventory automation technology to improve in-stock availability and managing the store transfer in line with the incremental sales in respective stores. 

The FDM survey also found that concerns around data security is the top barrier to AI adoption for 35% of organisations. 

Mitigating fraud risks

AI is also being used to enhance security and reduce fraud risks. AI-powered video analytics and smart cameras are deployed to monitor in-store activities and detect suspicious behaviour, minimising risks of theft and fraudulent transactions​.

Supply chain optimisation

AI contributes to supply chain resilience by improving logistics and delivery times. It aids in demand forecasting and inventory optimisation, ensuring that products are available when and where they are needed​.

Challenges and ethical considerations

While AI offers numerous benefits, it also comes with challenges. There is a need for ethical guidelines to ensure the responsible use of AI, particularly concerning data privacy and the risk of AI errors or ‘hallucinations’. The Australian Retailers Association (ARA) emphasises the importance of a balanced approach, advocating for a risk-based framework to manage AI implementation effectively.

FDM in retail

Our survey also found that 48% organisations don’t have the specialist skills to maximise AI.

FDM have launched thousands of tech careers across retail and FMCG around the world. We have partnered with the world’s largest brands for over 30 years, allowing retailers and FMCG companies to build diverse technical talent, utilising our graduate, ex-forces, returner and apprentice talent pools.​

One of our prestigious retail clients, migrated their APAC operations to Microsoft Dynamics 365 to improve financial reporting and integrate and upgrade their global systems.​

FDM Business Intelligence (BI) Developers and BAs facilitated data migration onto the new system, automated manual processes and created dashboards to standardise business processes, improving reporting and enabling management to monitor internal controls across business units.

Another leading luxury cosmetics client were completing an APAC-based manufacturing plant and engineering innovation centre. The facility manufactures and distributes high quality, prestige beauty products throughout the APAC region and serves as the blueprint for modernising manufacturing capabilities globally. ​

FDM’s IT Project Management Office Analysts have been involved in implementing state-of-the-art technologies and using sophisticated analytics and dynamic scenario planning to help unlock efficiencies and cost savings to drive business growth. ​

FDM Skills Lab

Emerging technologies and changing work practices mean companies have to focus less on clearly defined job roles and more on the capabilities of highly versatile professionals, who will add value to projects at pace when required.

Our five specialist Practices – Software Engineering, Data & Analytics, Change & Transformation, IT Operations and Risk, Regulation & Compliance – include multiple interconnected pathways at our FDM Skills Labs, building a versatile and adaptable consultant workforce.

FDM Skills Lab is a dedicated space designed for consultants to hone their practice-relevant abilities.

It’s an immersive ecosystem for professional advancement, blending theory with hands-on experience in a dynamic environment to facilitate consultant development.

Consultants acquire skills and develop experience within a diverse range of disciplines under a consulting area and can undertake a number of different roles when deployed on assignments.

Within our Skills Lab, we’ve set up multiple pods focused on AI integration in business operations, enhanced by successful workshops.

Our consultants

FDM Consultant Shweta Bhatia had joined our Change & Transformation Practice before going on assignment as a BA with a luxury retail client. Her current role involves managing change requests in JIRA, BRD (Business Requirements Documents) preparation, coordination with vendors and UAT (User Acceptance Testing) testing.

I am proud of being a part of a huge software upgrade project onsite with the client. This has widened my knowledge of IT processes. FDM has given a key advantage to my career and made me market ready to take on current projects with utmost confidence in myself. It has also shown me a future path to enhance my skills further.

Speaking of her FDM coaching she says –

Coaching in SQL query has helped me in my current assignment for UAT testing of sales postings, while the business analysis and ITIL certification has helped me understand the business needs and deliver IT solutions.

Shriya Sriram had joined our Data & Analytics Practice before her assignment with a global retail client. In her current role as a BA she is handling an end-to-end regression test project, where she has the chance to learn about backend flows and processes.

FDM provided me with an intensive refresher that facilitated a smooth transition from university to my current role, specifically in SQL and Microsoft Excel. In addition to technical skills, I was also benefitted by the insight into corporate usage of email / Microsoft Teams communication. While it sounds very basic, communication plays a crucial role when working with people. One of the most valuable concepts I learned during my training was the SDLC (Software Development Lifecycle).

Having a theoretical understanding of the SDLC prior to joining projects enabled me to grasp and navigate tasks more effectively from the start.

FDM can help solve a huge resourcing challenge for your tech team. Our consultants are upskilled in the latest industry-relevant tech to drive our clients’ digital transformation journey – in roles such as e-commerce app development, automation, data engineering and more.

Our talent solutions span multiple functions across the retail and FMCG sectors including:

• Supply chain & logistics
• Order management & fulfilment
• Payments & processing
• Store & eCommerce design
• Customer loyalty & rewards
• Sales, pricing & promotions

Recruiting year-round, we offer the flexibility and agility to fill short-term skills gaps or a steady talent pipeline to meet long-term goals.

Want to stay ahead of the competition? Work with us to implement innovative tech solutions and enhance your customer experience.

Contact us today!