AI and Retail: How AI Is Revolutionizing the Retail Industry
The retail industry has long been in a state of evolution, shaped by changes in consumer demand as well as advancements in technology. What was once a purely brick-and-mortar industry has expanded into e-commerce and now omnichannel. Today’s consumers expect the customer journey and the connection between the virtual and physical to be seamless for even the smallest of brands.
So, what’s next on the horizon?
In reality, what’s next is already here: AI. Today’s retailers are increasingly using artificial intelligence to improve cost management, learn how consumers engage with their products, and enhance both customer experience and operational efficiency.
Efficient, predictive, and accurate, AI is transforming the way retailers operate. Advanced data and predictive analytics systems are helping retailers collect, process, and analyze huge amounts of data, which they can use to make accurate, data-driven business decisions. This leads not only to improved profits for the retailer, but also a next-level experience for their customers.
Here are just a few ways that the partnership of AI and retail is changing the game for retailers and consumers alike.
Personalized Customer Experiences
Delivering a personalized shopping experience that is relevant and valuable to the consumer is becoming easier to do with the use of AI.
Online, interactive chat programs help improve customer service and engagement by engaging with customers and answering common questions. Throughout these conversations, chatbots collect valuable consumer data that can be used to inform business decisions.
In addition, algorithmic engines use image-based search and analysis to create personalized shopping experiences. These algorithms can recommend related products to consumers based on their needs, preferences, order history, social media behavior, and demographic data — accomplishing online what cross-selling does in-store.
AI algorithms can also use customer sentiment analysis to analyze customer feedback, online reviews, and even social media posts to measure consumer opinion about products, identify areas in need of improvement, and respond to complaints.
In the physical store, intelligent retail spaces are helping create customized shopping experiences for each visitor. Biometric recognition programs are able to recognize shoppers and adapt in-store smart displays to reflect their profile or loyalty account, prompting them with promotions and rewards.
In addition, deep learning algorithms collect and interpret customer feedback and purchase history to support next-generation product and service development.
With these AI-fueled tools, retailers can better understand customer preferences and behavior, streamline customer communication throughout the buyer’s journey, and ultimately create highly personalized experiences that build customer satisfaction, trust, and loyalty while also driving revenue.
Seamless Omnichannel Experiences
Not only does AI help improve customer experience in-store and online, it’s also helping retailers connect the two for a seamless omnichannel experience.
Through the use of AI-powered tools, retailers can customize a shopper’s experience to reflect the current context alongside their previous purchases and shopping behavior to create highly relevant displays and offers.
AI tools like chatbots, personalized product recommendations, and virtual product engagement can be used to replicate the in-store experience online. These tools help boost profitability by increasing conversion rates, streamlining staffing, and reducing product returns.
In-store apps and AI-powered checkouts have a similar effect on the in-store experience. As mentioned above, biometric recognition programs can be used to personalize displays for each customer, recommending products and offers based on their profile (including past purchases — both in-store and online).
In addition, implementing AI-powered checkouts can reduce the need for cashiers in-store while also reducing customer wait times and creating an effortless checkout experience for the consumer.
As consumers increasingly utilize a combination of in-store and online channels to find and purchase products, those retailers who embrace AI innovation will set themselves apart as market leaders.
Automated Inventory Management
Another way that retailers can benefit from the use of AI is through improved inventory management.
Today’s AI tools support better demand forecasting. Understanding which customers want specific products and where they want to shop for them is key to helping retailers manage inventory levels and avoid markdowns.
By gathering insights from the marketplace, consumers, and competitors, as well as historical data and seasonality (including factors like weather patterns), these tools can forecast shifts in the industry and predict future demand.
Advanced analytics and machine learning algorithms can also help retailers make informed decisions about pricing strategies and product assortment, ensuring that resources are allocated with maximum efficiency.
These tools have the ability to help retailers make changes to their merchandising and sales strategies, plan pricing and promotions, reduce overstocking, and adjust inventory and staffing in real-time for improved efficiency and increased profit margins.
Optimized Visual Merchandising
Believe it or not, AI can even analyze customer behavior in-store to help retailers optimize store layout for customer flow, improve product visibility, and design displays relevant to their target audience.
AI-powered computer vision technology can track a customer’s dwell time (how long they spend standing in front of a shelf or display) and gaze time (how long they spend looking at a particular item). This can provide crucial data to help retailers better understand their customers and find ways to increase engagement and conversion rates.
This technology can also help improve planogram compliance and inform staff of on-floor availability. Through image recognition and object detection, AI tools can help retailers automate product placement, check product prices and locations, and even identify empty shelves — passing that information along to staff to make real-time adjustments.
While some of this may sound like the stuff of a sci-fi novel, the partnership of AI and retail has become a reality — and it’s here to stay. Retailers who leverage the power of this partnership and embrace the paradigm shift that comes with it will set themselves up for sustained success and play a pivotal role in shaping the future of retail.
At Miller Wittman, we can help you create an engaging in-store customer experience that complements and expands on the experience you offer online. Our proven processes and tailored solutions can help you build a powerful retail environment that engages your customers and helps you achieve your sales and profit goals.
Contact us today to learn more.