Abstract

In recent years, the rapid digitalization of the retail sector has pushed customers’ expectations for

personalized digital experiences. Previous researchers suggest that artificial intelligence (AI) has

the potential to help retailers to meet this emerging demand, meanwhile many companies still

struggle to fully harness its potential. Therefore, this study aims to investigate how retail

companies can adopt and utilize AI to create value for their customers through a personalized

customer experience. To fulfill this purpose, the adoption of AI solutions among five Swedish retail

companies was analyzed. The data collection involved semi-structured interviews with

respondents from the retail companies, supplemented by insights from interviews with AI experts.

The findings show that AI has the potential to enhance personalization, leading to increased

relevance in communication, products that better match customer’s needs and an improved

customer experience. Currently, retailers see advantage in more traditional machine learning

methods for product recommendations, prediction of customer behavior and gaining insights

about their customers. Looking forward, generative AI has the potential for further personalization

with AI-assistants and tailored content. Two key factors were identified when implementing AI for

personalization: the establishment of clear goals and metrics prior to investment and involving the

customer in how their data is used to address privacy concerns. Furthermore, the study highlights

critical factors shaping the adoption of AI in retail companies, suggesting that investments in

technical infrastructure, skills development and leadership support are essential. Additionally,

resource availability and the appointment of so-called champions who spread knowledge about

AI in the organization, positively influence companies’ AI adoption capabilities.

For further research, the growing use of generative AI requires further investigation into its

adoption and applications. Furthermore, this study explores AI-driven personalization and its

customer value from a companies’ point of view, therefore this study suggests further research

from a consumer perspective.