Inverto: AI the Key to Procurement Savings in Retail
Artificial intelligence (AI) has firmly established itself as an invaluable asset across numerous industries – and retail is no exception.
In fact, research conducted by Inverto and parent company Boston Consulting Group (BCG) has revealed AI can slash procurement costs for retailers by as much as 15%.
AI as a solution to procurement challenges
It's a testing time for retailers, which are grappling with escalating costs and tariff uncertainties. In the UK, businesses must also manage financial strain resulting from the recent increase in National Insurance contributions.
However, the 2025 Retail in Transition report from Inverto and BCG provides a compelling case for AI as a strategic solution to procurement challenges. The report highlights how AI-powered tools, including advanced data analytics, should-cost modelling and task automation, can provide a competitive edge for retailers.
In direct procurement, which incorporates stock and merchandise accounting for a substantial 60-75% of total sales, AI presents a transformative opportunity for supply chain executives. AI platforms can offer automatic tracking of raw material costs and intelligent optimisation of purchasing decisions, enhancing cost efficiency.
By effectively integrating AI into supply chain operations, businesses stand to achieve a potential reduction of 5% in direct procurement expenses, directly affecting their bottom lines.
Indirect procurement also harbours considerable cost-saving potential. Sectors such as logistics, IT, marketing and facilities management often suffer from limited visibility, allowing inefficiencies to persist undetected.
According to Inverto and BCG, leveraging AI in these areas can expose opportunities for cost reduction and enable more effective management and benchmarking of supplier costs. AI-driven transparency allows for improved decision-making across indirect categories, with potential savings reaching up to 15%.
Bridging data gaps
One of the significant challenges reported by UK retail sector buyers is the lack of actionable data, hampering effective supplier negotiations. Almost three-quarters (72%) admit to not having the necessary data for negotiations, while an equal proportion lack the analytical prowess to develop it.
This situation sets the stage for AI to fulfil a critical function by providing detailed insights into cost breakdowns, supplier benchmarks and internal procurement volumes. Such insights empower buyers to conduct negotiations on a factual basis.
"Our modelling shows that AI can deliver very substantial savings in the retail sector," explains Katharina Erfort, Principal at Inverto. "AI not only makes retail more cost-effective but also enhances agility and resilience – helping retailers secure long-term competitive advantages."
Further accentuating these challenges, the report indicates that 86% of buyers feel overwhelmed by minor administrative tasks during annual negotiations, detracting from strategic preparation. Here too, AI demonstrates value by automating repetitive tasks such as data entry, report creation and supplier communication.
By diverting mundane tasks to AI, procurement teams can focus on critical business activities, including supplier management and contract negotiations.
Transformative outcomes
Retailers embracing AI within their procurement operations already report marked improvements in efficiency, cost management and team productivity, resulting in a strategic advantage over competitors who postpone AI adoption.
Given the substantial portion of retail costs tied to procurement, the integration of AI presents both an opportunity and a necessity.
"Retail as an industry is undergoing a period of rapid transformation," adds Katharina. "AI can support businesses through optimising procurement processes, while reducing costs.
"AI can deliver tangible benefits and transform procurement processes. Retailers who are using AI to drive change will outclass the market, where those who don’t risk being left behind."
