It doesn’t take a crystal ball to know AI will be a major player in 2024. In fact, 87% of retailers have already integrated the technology into at least one area of their businesses. However, the top use cases for AI in 2024 might not be what you’d expect.

In 2023, chatbots and generative AI were all the rage. Next year, the focus will be on how AI improves productivity and profitability in ways that are more specific to the needs of individual retailers. Looking ahead at 2024, I foresee the top three AI investment areas will be loss prevention, employee support and management, and returns optimization.

Loss Prevention

In 2022, shrink, as a percentage of total sales, cost retailers $112.1 billion in losses, according to a report by Appriss Retail and NRF. This proves why retailers need to invest in AI-driven loss prevention tools to lessen the negative financial impacts of theft and fraud. For example, Appriss Retail empowered a UK-based gaming and entertainment retailer to reduce revenue erosion by over one million dollars with AI-driven loss prevention.

Unfortunately, shrink will only get worse until retailers effectively utilize AI-driven exception-based reporting to identify theft and fraud before it impacts profits. The report from Appriss Retail and NRF found that retailers believe organized retail crime, external theft, and internal theft are all more of a priority now than they were a year ago.

Employee Support and Management

With strikes and labor shortages continuing, retailers must learn how to support and bolster their existing team members. Fortunately, retailers can turn to AI to monitor employee behavior and recommend individualized rewards for top performers and training opportunities for those that are struggling. For instance, if a cashier is consistently ringing up items incorrectly, they may need to be re-trained to avoid stocking mishaps and lost profits. On the flip side, retailers can use AI to create rewards programs that incentive employees to go above and beyond.

Case in point, Appriss Retail recently supported a regional department store as they identifed deviances in employee conduct. As a result, the retailer flagged 25% more actionable cases, generating thousands of dollars in value.

Returns Optimization

Finally, retailers must optimize the point of return in 2024. In 2022, for every $1 billion in sales, the average retailer incurred $165 million in merchandise returns. It’s important that businesses discover new ways to save-the-sale, including AI-driven personalized incentives designed to encourage shoppers to make a new purchase after their return is finalized.

This strategy helped a leading automotive aftermarket parts provider increase purchases after in-store returns by 22%, improving profits and shopper loyalty.

Looking Ahead to 2024

In just a few years, retailers will likely rely on AI to optimize every step of the retail experience. But now, it’s important to focus on the use cases that will deliver the best ROI today. Whether it’s in loss prevention, employee support and management, or returns optimization, retailers that implement AI will be reaping the benefits in 2024 and beyond.

Michael Osborne is the chief executive officer for Appriss Retail. He has more than 20 years of experience bringing disruptive and innovative solutions to market in B2B eCommerce, marketing technology, and enterprise software segments. His experience spans the range of co-founding and leading seed-stage companies to growing scaled businesses to nearly one thousand employees. He’s a people-first leader who works with investors and directors, employees and partners, to achieve growth and results quickly and efficiently.

Prior to joining Appriss Retail, Osborne served as the president of Wunderkind where he oversaw all commercial functions ranging from sales and marketing to strategic alliances and international partnerships. He has served as CEO, President, CRO, SVP of Sales, member of the Board of Directors, and Advisor for more than a dozen companies, including SmarterHQ, which was purchased by Wunderkind.