ARTIFICIAL INTELLIGENCE IN RETAIL: PERSONALIZATION VS. PRIVACY CONCERNS

Abstract

The fast pace of Artificial Intelligence (AI) infiltration into the retail industry has transformed customer interactions, supply chain, and marketing spheres in a dramatic way. One of the most noteworthy uses of AI in the retail sector is personalization: this allows retailers to make bespoke recommendations to products, promotions, and the shopping experience according to each consumer. Retailers will be able to improve customer satisfaction and their loyalty to a brand, as well as maximize their sales with the help of machine learning algorithms, natural language processing, and predictive analytics. Nonetheless, the proposed implementation of personalization powered by AI implies a variety of issues related to privacy. The acquisition and processing of large data sets covering areas like purchase histories and behavioral patterns open the possibility of unauthorized data access, profiling and the misuse of sensitive information. The ability of AI-driven personalization to bring benefits and ethical, legal, and societal consequences relating to data privacy is the topic of this research paper. It discusses how retailers can use responsible data collection procedures, take proper security measures, and ensure more AI-related information is transparent to eliminate the possibility of privacy risks even as they continue to give personalised experiences. The paper also examines how consumers view privacy, the regulatory environment and how trust in the AI systems can be established. Using the case studies and analyzing existing industry practice, this paper illuminates the trade-offs and decision-making constructs that retailers have to navigate in the data-driven world. The conclusion implies that the effective AI application in retailing is all about a comprehensive use of the personalization advantages combined with the high-security measures that will make this walk friendly to the ethical concerns of the changing environment. Finally, the study demonstrates that an AI-based retail fulfilment system can be a long-term solution as long as the balance between personalization and privacy is encouraged and accepted.