Value propositions of artificial intelligence in retailing

Abstract

Numerous companies are increasingly employing artificial intelligence (AI) to generate accurate predictions, increase efficiency and automate tactical decision-making processes. However, misguided AI initiatives can end up destroying customer value, for example, through customers experiencing a loss of control or fear of their privacy. To develop guidelines for retailers and better understand value creation in this context, this study examines how retailers leverage AI in creating customer value propositions (CVPs). This conceptual paper discusses and synthesises customer value creation and the use of AI in retailing. Ten case examples are used to illustrate how retailers with different CVPs leverage AI. This analysis provides a basis for discussing the implications of AI for retailers’ value creation. Retail managers will benefit from a structured understanding of different AI strategies and their links to CVPs.