What: McKinsey outlines a comprehensive framework for retailers to leverage AI and generative AI in creating personalised marketing experiences, emphasising the integration of targeted promotions with tailored content creation.

Why it is important: With 71% of consumers expecting personalized interactions and 76% expressing frustration when these aren't delivered, this comprehensive approach helps retailers bridge the critical gap between customer expectations and current capabilities.

McKinsey's analysis reveals a significant opportunity for retailers to enhance personalisation through AI and generative AI technologies. The framework addresses the challenge of communicating effectively with diverse consumer groups while scaling personalised experiences. By combining AI-driven targeted promotions with generative AI-created content, retailers can deliver more relevant offers and messages to specific customer segments. The approach is built on five key elements: data, decisioning, design, distribution, and measurement. This technology stack enables retailers to create seamless omnichannel experiences, optimise promotional spending, and generate tailored content at scale. The framework emphasises the importance of strategic implementation, including proper data integration, robust decision engines, innovative design processes, sophisticated distribution architecture, and comprehensive measurement systems. This integrated approach can help retailers achieve significant improvements in sales and margins while meeting growing consumer demands for personalised experiences.

IADS Notes: The article's emphasis on personalisation and AI implementation aligns with significant industry developments observed throughout 2024. The strategic importance is validated by Google Cloud's October 2024 findings, where 87% of retailers implementing generative AI saw at least a 6% revenue increase. This growth corresponds with evolving consumer expectations, as Coveo's June 2024 study revealed 72% of consumers anticipating AI-enhanced shopping experiences. The effectiveness of these technologies was further demonstrated in November 2024, when BCG reported that 38% of shoppers were actively engaging with GenAI during major sales events. The operational impact is particularly noteworthy, with Adobe Analytics reporting a 304% year-over-year increase in AI-directed retail traffic by March 2024. However, December 2024 data showing only 10% of companies successfully scaling their GenAI applications underscores the article's emphasis on the need for a robust technological foundation and strategic implementation approach to achieve competitive advantage in personalised retail experiences.

Unlocking the next frontier of personalised marketing