DefinePK

Abstract

This study examines the integration of Artificial Intelligence (AI) in the decision-making processes of Small and Medium Enterprises (SMEs) in Nigeria’s retail sector, focusing on its applications, benefits, challenges, and future prospects. Using a descriptive research design, data was collected through a Google Forms survey from 100 SME decision-makers. The findings reveal that while 70% of SMEs have adopted AI to some extent, only 20% have fully integrated it into their operations, with customer behavior analysis (60%) and inventory management (50%) being the most common applications. AI adoption has led to improved decision-making (65%) and enhanced operational efficiency (60%), yet significant barriers such as high implementation costs (70%) and a lack of technical expertise (65%) hinder wider adoption. Despite these challenges, 80% of respondents expressed interest in expanding AI usage in areas such as advanced customer analytics and supply chain optimization. The study concludes that while AI presents immense opportunities for SMEs to enhance competitiveness against larger e-commerce platforms, addressing financial, technical, and infrastructural barriers is crucial for wider adoption. It recommends affordable AI solutions, targeted training programs, improved financing options, policy support, and strategic partnerships to facilitate AI integration and long-term sustainability in Nigeria’s retail industry.
Keywords: AI Optimization, Decision-Making, Small and Medium Enterprises (SMEs), Retail Industry, Business Intelligence, Nigeria
 JEL: O30, L81, M15, L25, M21, D81