The ScaleFactor State of SMB Finance report says only 10% of retail businesses are using Artificial Intelligence (AI). The report reveals Small and Medium Business (SMB) retailers are the most reluctant to implement AI or machine learning (ML) solutions into their workflow.
Retail Business AI Statistics
Furthermore, 40% say they are not interested in this technology. Despite the disinterest, 44% of retail businesses say they do not find the process of implementing AI or ML challenging; the highest across all industries.
And over a third (39%) admit to not knowing AI/machine learning were options for their accounting solutions. So, there is some conflicting data during this early stage of AI and ML technology. This is especially the case for very small businesses.
While most medium-sized businesses (72%) use AI and machine learning, very small businesses (13%) are lagging behind across all sectors. Those who use AI often use it for bookkeeping (76%), invoicing (61%), payroll processing (60%) and bill paying (55%).
Kurt Rathmann, founder and CEO of ScaleFactor, explains this very point in the release for the report. Rathmann says, “Small businesses are finding increased value in adopting technology solutions to assist in the back office as customer demand for quickness and e-commerce solutions increase.”
He also goes on to say organizations are now experiencing a new phase that is focusing on harnessing the efficiencies of an intelligent workforce through the use of insightful and prescriptive technology. In turn, this will consolidate complex back-office operations into one intuitive ‘business OS’ providing a foundation for owners to focus on growing their business.
What is Changing?
A majority of SBMs are now adopting technology-based accounting or back office solution – ditching Chief Financial Officers (CFOs). Currently, 58% of SMBs use accounting/back office tech solutions while a whopping 76% do not have a full time or fractional CFO and have no plans to hire one. Only a fraction, 23% have a full time dedicated FCO. And these changes are being driven by technology such as AI and ML.
In terms of financial sources, they vary depending on the size of the company. For mid-size businesses, much of the funding comes through loans from financial institutions. Small businesses, however (59%) use their credit cards to finance their business. While very small businesses (77%) reinvest their company’s profits into the business. Interestingly though, across the board, nearly a third (34%) reinvested their company’s profits into the business.
The ScaleFactor report reveals a majority of those surveyed showed a stable or growing revenue number compared to last year. Only a fraction (4%) saw a decrease in revenues over 2018, with 44% seeing a 10% or more increase in revenue growth.
When it comes to hiring, retail businesses do have the highest rate of new hires amongst the vertical industries in the survey. Twenty-two percent of businesses report two to three new hires in the past 12 months
Withstanding this, many businesses are not looking to hire new staff. In fact, 52% of these businesses did not hire any new employees in the past 12 months. Salary costs (18%) is the biggest reason for not hiring new staff. While shortages labor skills (13%) was another challenge owners are facing in a tight labor market.
Make Your Business Smarter
Artificial intelligence is widely used in business applications for automation, data analytics, and natural language processing. AI can help businesses increase sales, detect fraud, improve customer experience, automate work processes and provide predictive analysis.
In the retail segment, AI is particularly helpful to map consumer behavior and improve customer experiences. This can come in handy in an age where small retailers are competing with behemoths such as Amazon and Walmart. With an eCommerce platform, small businesses can compete with the giant online retailers in the marketplace.
Artificial intelligence can help bring efficiencies into operations by replacing people from doing repetitive tasks. By helping avoid repetitive tasks by your workforce, AI can introduce automation within a business. With AI, employees can then focus on doing high-priority tasks that require human attention and not waste time on unproductive tasks. Increasing efficiency ultimately translates to higher profits for businesses.
With AI retailers can better collect and organize massive customer data. Using this data, AI can draw conclusions and create a more personalized shopping experience for customers. The data will help you know what they like, thus providing insights to create a more engaging experience for customers based on their interests and likes. Retailers can also predict how well a product will perform in the market by learning from the past to make strategic and decisions easily.
AI can help customers find the items through visual search to personalizing their experience through chatbots. AI/machine learning is revolutionizing the retail industry in a number of ways. Whether you are looking to address marketing, customer service or sales AI can provide a customized solution for your needs.
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