It is safe to assume that AI is the next technological leap, just as significant as the invention of the internet, electricity and the steam engine were in the past. We are currently witnessing the breakthrough in digital transformation, and we are not yet able to predict how it will evolve over the next months or years. It is worth keeping in mind, however, that in the case of AI, these are distant dates, and we could just as well be talking about part of a revolution that might come in the next few weeks.
AI is enhancing many jobs, from marketing through retail to business intelligence and analytics. It can save a lot of time by automating many repetitive tasks, which will allow specialists to focus on what really matters: solving problems and creating more customer-centric approach.
How AI is changing retail
As SPD group points out, the prevalence of AI in the retail industry has significantly increased over the past few years. AI in different aspects is now used by more than a quarter (28%) of retail companies, whereas in 2016 there were only 4% of such companies.
These developments pose unique challenges. In the future, access to excellent AI tools may become commonplace, levelling the playing field. This means that the starting point for competition will change, and the ability to adapt AI to a company’s needs will be crucial.
The expertise of specialists will continue to be essential. They will either verify AI’s work or utilise it to automate their tasks. Furthermore, new professions combining AI with traditional roles will emerge, such as AI prompt engineers who communicate with AI for optimal results. Consequently, competition will intensify, and new methods of reaching customers will emerge.
However, some factors will remain unchanged. The number of customers will remain constant, and their purchasing power will not increase significantly. This will result in companies fiercely competing for the same customers, but in more advanced ways.
Eight benefits of AI for retail business
Here are some ways of leveraging AI in retail:
1. Process automation
Artificial intelligence in the retail industry is helping to automate many of the tasks that specialists used to do manually, therefore employees spend less time on repetitive and time-consuming tasks. As a result, they are able to put their effort into more customer-focused assignments. AI-assisted work is also more reliable, as it eliminates the risk of a human error occurring while performing such tasks as invoice processing.
2. Customer service – from automated assistance to cashierless stores
There are many levels of AI taking over customer service at the physical storefront and online shopping site. It can monitor customer behaviour and measure customer satisfaction (using recognition of facial expressions). This will identify situations where the customer may need help and enable staff to respond faster.
In many stores, customers no longer checkout products themselves. AI does it for them, while customers choose the products they need and put them in the shopping cart. A common payment solution, which is often used in autonomous retail stores, is to charge the payment from the linked payment card when the customer leaves the store.
3. Prevention of loss and theft
Automated charging for certain products will reduce the risk of loss. In such a model of retail, customers can enter a fully automated and self-service store only if they are previously authenticated. In this way, the payment for the collected products will always be charged from their account.
In cases of physical retail stores with traditional service, AI can be used to detect suspicious behaviour and theft. Loss prevention can also be based on detecting products that should be sold out soon (due to expiration date or the end of the season).
4. Customer behaviour analysis
AI can also help analyse patterns of past customer behaviour to develop better guidelines for customer experiences in the future. This will allow better product recommendation or more optimised purchasing processes.
This use of AI is not concerned with detecting what product customers will like in the future. Instead, its task is to determine what model they will want to buy and use products and services in.
AI can also analyse customer behaviour to detect which in-store circumstances are causing a sudden drop in sales or are a distraction to the purchasing process. The analysis of customer behaviours can also apply to the ecommerce space, where AI detects poorly optimised points, such as unintuitively designed UI and UX elements.
5. Providing a unique customer experience
It is based on providing personalised messages and communications to customers, as well as using customer insights and giving them personalised offers. This makes customers feel important and valued, which translates into increased customer loyalty.
Personalised messages mean the brand itself is perceived less like a vendor and make the relationship rather friendly. If there are problems (such as an error in the service process), customers may also forgive the company more easily and are more likely to return to using its services.
6. Interactive chat
AI can be used to introduce a chatbot that allows customers to get real-time help in the way that suits them best. Chatbots can answer the most popular questions about products and services, but the collected data on customer preferences, actions and concerns can help detect various trouble spots for customers.
Such data will help make better decisions on how to optimise the customer experience, from placing products in the store to the structure of the app or website.
7. Logistics – supply chain optimisation
Artificial intelligence can analyse where and what products were sold fastest, and therefore where they are needed most. With deep learning and its help, the supply chain can be optimised to deliver the most needed products to consumers in specific locations. Algorithms can also help in finding optimal and cost-effective shipping routes.
8. Scheduling the time and place of work of employees
Based on the analysis of various factors, such as the presence of customers in stores, it is possible to identify moments of increased demand for employees in specific locations and, on this basis, better arrange their deployment.
This will help in avoiding employee overload and in the long run will have a positive impact on their wellbeing.
What are examples of AI usage in retail industry?
AI is already making a significant impact across various retail sectors, such as fashion, food, pharmacy and convenience stores. Its application is driving improvements in financial performance, retail operations and customer experience. Let’s explore practical examples of AI usage in retail.
Fashion industry: Virtual fitting rooms
AI technology is revolutionising the fashion industry by assisting customers in making purchasing decisions. One such application is Nike Fit, an augmented reality feature available in the Nike app. It accurately measures customers’ foot size and compares it to data collected from other users to recommend the perfect shoe size or suggest a size variation.
Another example is The North Face, which employs AI to match customers with the ideal coat model based on their specific needs. Users answer questions about the intended usage conditions, and the algorithm identifies the most suitable option.
Beauty industry: Perfect shade matching
In the beauty industry, personalised customer service and expert advice are vital. Sephora, for instance, has developed an app that scans customers’ faces and provides tailored recommendations for shades, lipsticks and other beauty products based on the collected data.
Food industry: Fast and convenient ordering
In the food industry, speed and convenience are key. Integrating AI into ordering processes through mobile apps can enhance customer experience. Voice assistants have been introduced by companies like Starbucks and Taco Bell, enabling customers to place voice orders on the go and pick them up at the restaurant.
Pharmacy: Accurate diagnosis and recommendations
AI can improve the pharmacy service process by processing patient information, associating it with specific ailments and suggesting relevant questions to enhance diagnosis accuracy. Moreover, AI can recommend more effective treatments based on patient experiences and lifestyle.
To sum up: What is the best use of AI in retail?
The best use of artificial intelligence in retail is the one based on a holistic approach to introducing AI into processes within the company – from raw data through analysis to customer service. This is how it should be implemented to utilise its potential even more effectively.
The future of artificial intelligence in retail
The future is facing AI. In 2021, the global value of the market for AI for the retail industry was $4.84bn. Spending on developing AI for retail businesses will only increase, and it’s estimated that by 2029 it will reach as much as $52.94bn.
What might the future of AI in retail and marketing look like?
AI in the retail industry will help in optimising processes even further and help in monitoring their efficiency.
AI in marketing will help create even more tailored messages that will lead to developing even better relationships with customers
How Comarch can help
The retail industry is developing rapidly and year after year manufacturers are introducing more and more solutions based on new technologies, machine learning and AI. In order not to fall behind the competition, it is necessary to constantly develop retail solutions. Comarch can help you in starting an AI-powered retail loyalty program with a range of tools and functionalities that will take your business to the next level. These include:
- AI/ML personalised marketing services – for creating personalised offers and promotions for customers
- AI/ML-powered chatbots – for automating interactions with customers and providing them with quick and convenient solutions to their problems, while delivering a personalised and seamless shopping experience
It is also worth mentioning that the use of AI brings many risks. These are mainly related to the fact that AI processes and generates a lot of information that can be targeted by attacks. To prevent this, it is important to always follow the latest cybersecurity recommendations and use only trusted providers of IT services.
If you want to use AI to develop good relationships with your customers, check out the Comarch Loyalty Marketing Platform. Contact us and find out how we can help you grow your business.