“AI has the potential to revolutionize the retail industry by introducing innovative solutions that enhance efficiency, customer experiences and overall business operations.”

That’s what a well-known AI model, ChatGPT, told me when I asked about positive use cases for AI in the retail sector. It went on to list several areas where AI could help a retailer out, including creating personalized customer experiences; handling inventory management and demand forecasting; dynamic pricing; fraud detection and security; visual search and image recognition; and supply chain optimization.

ChatGPT also acknowledged, in response to a follow-up question, “that while the integration of (AI) in retail stores brings about numerous benefits, it also comes with inherent risks.”

Because AI systems often rely on vast amounts of customer data — to provide personalized experiences, for example — retailers must ensure that they handle this data responsibly and in compliance with privacy regulations. “Mishandling or data breaches can result in legal consequences and damage to the retailer’s reputation,” ChatGPT pointed out. Bias is another potential problem, since AI algorithms can inadvertently perpetuate biases present in historical data, which could lead to discrimination in such areas as hiring, customer service and promotions.

And if those worries are not enough, there’s also the fact that generative AI systems have occasionally been known to “hallucinate,” or just make stuff up.

Given the compelling reasons for retailers to use AI, and the potential risks involved in doing so, it’s probably a good idea for human beings to come up with some guidelines. And in fact the National Retail Federation’s Center for Digital Risk & Innovation has done exactly that, by releasing its “Principles for the Use of Artificial Intelligence in the Retail Sector.” These principles are structured into four key categories:

• Governance and Risk Management — NRF encourages retailers to establish strong internal governance for AI tools in order to manage the risks associated with AI while ensuring the technology delivers anticipated benefits.

• Customer Engagement and Trust — Retailers are urged to be transparent, openly communicating their use of AI impacting customers, and making sure there are safeguards against unlawful discrimination and that privacy concerns are addressed.

• Workforce Applications and Use — NRF advises retailers to oversee and review AI applications affecting employees to ensure that AI is applied to support business needs without compromising the well-being of the workforce.

• Business Partner Accountability — The principles stress the importance of clear guidelines for business partners providing AI tools, data sets and services.

If you want to know more, you can find it here: https://nrf.com/research/principles-use-artificial-intelligence-retail-sector

Or you could just consult your favorite AI app. Just make sure to fact-check the answer you get.