By Dean Wolson, General Manager, Infrastructure Solutions Group, Lenovo Africa

The adoption of advanced technologies in South African retailers is moving at a slow pace. While artificial intelligence (AI) has made inroads into routine processes like inventory management, demand forecasting, and chatbot-based customer support, it has yet to achieve its transformative potential in the sector. This underutilization represents not just a technological lag but a missed opportunity to redefine customer experiences, streamline operations, and drive profitability.

Globally, retailers are harnessing AI to deliver hyper-personalized experiences, anticipate market trends with predictive analytics, and optimize supply chains to minimize waste. These advanced applications have allowed businesses to stand out in competitive markets by offering tailored customer solutions and operational efficiency. Yet, local retailers have been slow to invest in these high-impact areas, often viewing AI as an add-on rather than a foundation of their strategy.

The Investment Challenge

South African retailers face a range of challenges that are preventing the widespread adoption of AI and causing them to lag behind global competitors. One of the most significant barriers is the high cost of AI implementation, which includes expenses for infrastructure, hardware, and training a skilled workforce. Smaller retailers, in particular, struggle with the initial investment, limiting their ability to integrate AI technologies. Moreover, there is a shortage of AI expertise in South Africa, with local talent in data science and AI remaining scarce. This makes it difficult for businesses to effectively leverage AI and hampers their ability to implement it successfully. Data privacy concerns, particularly around South Africa’s strict Protection of Personal Information Act (POPIA), also create hesitancy, as businesses worry about potential legal complications when handling customer data.

In addition, many South African retailers are still unaware of the potential of AI, leading to a reluctance to invest in these technologies. This knowledge gap is compounded by a fear of failure, with businesses hesitant to adopt AI without a clear understanding of its benefits and applications. Furthermore, inconsistent infrastructure, such as limited access to high-speed internet, further impedes the deployment of AI solutions. While a growing number of businesses are beginning to recognize AI’s transformative potential, overcoming the combined challenges of cost, skills shortages, data privacy, and infrastructure is critical. Research shows that over 60% of South African businesses see AI as a game changer for their industry in the next two years, while Lenovo's global CIO Playbook research conducted with IDC, indicates that retailers have identified emerging technologies such as generative AI as their top business priority for the year ahead. However, without addressing these barriers, the country risks falling further behind in the global race to embrace AI.

Specific Use Cases to Drive Change

AI tools are increasingly embedded in software already used by retailers, such as Shopify and Salesforce. This accessibility presents opportunities for even small and mid-sized businesses to improve customer service, decision-making, and operational efficiency.

ConnectRetail, launched by ConnectGroup earlier this year, is also reaching great milestones by transforming retail management with innovative AI technology tailored to the South African market. Designed to replace fragmented communication channels like store-based email and WhatsApp groups, the platform centralizes operations and guides store managers on daily priorities. Notably affordable compared to international competitors, ConnectRetail’s standout feature is its AI-

powered voice-to-text capability, which converts floor walks into actionable task lists, ensuring tasks are accurately captured and promptly addressed. The business also excels in sentiment analysis, enabling retailers to interpret feedback from hundreds of stores through concise summaries that reveal trends and areas for improvement. With robust communication tools, task management features, a knowledge base for continuous learning, and advanced analytics, ConnectRetail empowers retailers to enhance operational efficiency and adapt to ever-changing business demands.

Similarly, C2RO leverages AI to provide anonymous customer insights using existing in-store cameras, helping businesses optimize layouts and manage peak demand.

C2RO, a company part of Lenovo’s AI Innovator Programme, uses existing cameras in retail stores to provide AI analysis of customer movement in stores. The data is anonymous, but it helps manage demand peaks, ease queues and understand consumer demand within a day, crucial for retailers selling fresh food for example.

These examples highlight the need for strategic investments in AI that solve real business problems while enhancing customer experiences. The key is to focus on delivering measurable value, testing solutions, and restating to ensure the technology aligns with both business goals and customer expectations.

The Power of Personalization

One of the most compelling opportunities AI offers is hyper-personalization. According to research, 80% of consumers are more inclined to make a purchase from a company that provides personalized experiences, while developing customized recommendations can increase sales by up to 20%.

According to the Havard Business Review, to achieve impactful personalization, retailers must excel across five critical areas: empower, recognise, reach, show, and delight the customer. This starts with truly understanding customer needs and tailoring interactions that provide meaningful value. Next, companies should build trust by securely managing customer data and fostering long-term digital relationships. Effective personalization also requires timely, context-aware outreach—leveraging AI to orchestrate interactions across channels. Content is key. Robust libraries powered by generative AI, like Pandora's, is a good example of delivering customized experiences that resonate deeply with customers. Finally, to delight customers, leaders like DoorDash continually experiment and refine their strategies using agile methodologies, ensuring every interaction is optimized and engaging. Together, these elements form a blueprint for personalization that drives customer loyalty.

Globally, AI-driven personalization has already proven its ability to boost customer loyalty and increase sales. For South African retailers, adopting similar strategies can redefine how they engage with their customers, offering a competitive edge in a crowded market.

How to Get it Right?

While AI has the potential to revolutionize retail in South Africa, realizing this potential requires strategic investment, a shift in perspective, and a relentless focus on customer value. By integrating AI into the core of their operations and treating it as a critical driver of innovation, retailers can unlock new opportunities for growth, efficiency, and customer satisfaction.