AI in Retail: The Transformative Potential of Unleashing Contract Data

The retail industry is on the brink of a revolution, driven by the immense potential of artificial intelligence. According to a recent study by IHL Group, AI's worldwide economic impact on retail through 2029 is projected to reach an astonishing $9.2 trillion. In the Americas alone, AI-related technology impact is expected to exceed $3.2 trillion, underscoring the immense scale of this transformation.

I recently joined a panel assembled by ReThink Retail to discuss IHL’s findings, and the consensus was that the ROI for AI in retail is undeniable. As Carlton Dossmann, Corporate VP of US Retail & Consumer Goods at Microsoft, noted during the discussion, for every $1 spent, retail will find $3.50 in return. 

This kind of return on investment is nothing short of transformative, making it clear that AI is poised to reshape the retail landscape in profound ways.

A revolution in analytics in supply chain management

For my part, I noted that the analytical capabilities of AI will have an outsized impact on how retailers operate in the future, especially in the area of supply chain management.

The IHL study identifies Merchandising and Supply Chain Management as the area set to benefit the most economically. Key processes such as supplier negotiations, demand forecasting, inventory optimization, routing and logistics, and quality control are all areas where AI is expected to have a massive impact.

And this is where I get excited, given that at the heart of all these processes lies a critical element: contracts.

Transforming contract data into enterprise insights

Contracts are the foundation of relationships between retailers and their suppliers, logistics partners, and other key stakeholders. Yet, today, contracts often sit outside the very processes they are meant to support, particularly in areas like supply chain management. This disconnect leads to inefficiencies, lost margins, and missed opportunities. In fact, according to Icertis analysis, an average of 2-4% of a contract's expected value is lost because its terms aren't followed—a staggering figure that highlights the critical need for better contract management.

As AI continues to advance, these challenges will only become more pronounced if contracts are not fully integrated into business workflows. AI's performance is directly tied to the quality and accessibility of the data it processes. If contract data remains siloed, AI will be unable to deliver on its full potential, leading to suboptimal outcomes and missed opportunities for retailers.

The good news is that AI itself can assist in integrating contracts and contract data into broader business workflows, effectively turning legal language into machine-readable code that can be seamlessly integrated into systems like supply chain management (SCM). This integration ensures that contracts are not only followed but also optimized for better outcomes.

With this data synthesized, AI can surface insights and analytics that power opportunities to optimize supplier relationships, enhance inventory management, and streamline logistics—all while ensuring that contract terms are adhered to. This creates a virtuous cycle of efficiency, where contracts are no longer a stumbling block but a strategic asset that drives business performance.

Conclusion

The retail industry's AI-driven transformation is inevitable, but to fully harness the power of AI, contracts must be at the forefront of this revolution. By integrating contracts into AI-powered workflows, retailers can unlock new levels of efficiency, drive better business outcomes, and seize the full potential of AI innovation.