The Nordic Retail Summit 2024 this year focused on two of the most critical issues for the future of retail: sustainability and AI in retail. The event, organised by Svensk Handel, brings together representatives from retail, government authorities, and politicians, and of course, Bedege was present to gain insights on the hottest topics in the industry.
One of the topics discussed was the "tsunami" of sustainability legislation coming from the EU in 2025. Simply put, these primarily concern products where the requirement is that all products must be circular, have long durability, and be recyclable. This imposes demands on companies to, for example, provide spare parts for many more types of products than before. The new sustainability legislation also places more demands on traceability throughout the entire chain, and we will also see some new laws regarding CSR (Corporate Social Responsibility).
Sustainability Challenges in Retail
Increased demands on Swedish retail companies also create concerns about competition from companies in, for example, Asia which do not have the same sustainability requirements and thus can keep their product prices low and compete with Swedish actors on different terms.
The Finance Minister, who was present, believes that politics must do more and use the tools available to put a stop to unhealthy competition. When she was asked what she thinks about companies like Temu and Shein, which are currently evading sustainability requirements and can compete with Swedish companies under different conditions because their headquarters are outside the EU, she replied:
They make me angry
– Finance Minister Elisabeth Svantesson on Asian companies like Temu and Shein being able to compete for Swedish consumers without having to comply with EU sustainability legislation.
The Role of AI in Retail
While sustainability legislation is high on the agenda, technological innovation, especially AI, plays an equally crucial role in the future of retail. Ludvig Strand, Emerging Tech & AI Future Analyst at Axel Johnson, discussed this and did not disappoint us.
According to Ludvig, we are currently just scratching the surface of how AI, which actually gives us all access to the entirety of human knowledge compressed, will change our lives. Below are two examples of how Kicks and Walmart are already using AI today.
Kicks Beauty Bot
The cosmetics and beauty chain Kicks customers already have the opportunity to use their AI-based Beauty Bot. Customers can ask the Beauty Bot for personal beauty advice and receive answers with product tips.
Walmart's Automated Supplier Negotiator
Walmart has over 100,000 suppliers, and for them, it is not economically viable for human resources to spend time negotiating new contracts with better terms with all these suppliers. Therefore, they have allowed human resources to focus on the larger contracts and let AI negotiate with the smaller suppliers. In more than half of the cases, AI has negotiated better terms, thus saving a lot of money.
And what about the future? An interesting example of what the future may involve is a transition from B2C to B2A, that is, Business to Agent. In the future, we will likely all have our own AI agent. We will simply outsource processes that we currently spend time on related to retail to this agent, such as information search before a purchase (finding the cheapest with the best delivery options), purchasing, and even returns. It will suffice for us to take a picture of a pair of shoes we've bought that we want to return, and our AI agent can find the receipt in our inbox, book the return and pickup, and so on.
To summarise, here are a few points showing how AI is used and will be able to be used in relation to retail:
- As a personal shopping advisor who can provide tailored tips based on the individual and their needs
- As a contract negotiator to negotiate better terms with suppliers
- As a personal agent for the individual customer. The agent can assist with information searches, purchasing, and returns, and retail will need to work with B2A (Business to Agent).
