AI in retail industry is rapidly transforming the customer journey and experience.
The fundamental steps of shopping have mostly stayed the same throughout the years: enter a store, choose the ideal item, and pay for it. With personalization, automation, and more efficiency, artificial intelligence has the ability to revamp the conventional shopping experience totally.
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AI in retail industry: The transforming force
The retail sector has been going through a digital shift for a while now. Every branch of retail companies has seen a rise in speed, efficiency, and accuracy, largely because of sophisticated data and predictive analytics technologies that support businesses in making data-driven business choices.
Without the internet of things (IoT) and, most significantly, artificial intelligence, none of those insights would be feasible. Businesses now have access to high-level data and information that can be used to improve retail operations and create new business prospects thanks to AI in retail. In fact, it’s predicted that over the course of three years, AI in retail will increase sales by $40 billion.
The importance of AI in retail
Physical stores are still the king of retail, but they must operate in very competitive markets. Similar to physical stores, digital stores compete in a market where they can easily access their rivals. Retailers can use AI to transform the shopping experience for customers and gain the competitive edge they need to remain relevant.
By using AI-driven demand forecasting to optimize inventory, retailers can maintain agility while enabling personalization.
The market size of AI in retail
AI In Retail Market Size, Share & Trends Analysis Report of Grand View Research forecasts that:
“The global AI in retail market size was valued at USD 5.79 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) exceeding 23.9% from 2022 to 2030. The growth is fueled by factors such as the constantly rising number of internet users, smart devices, the need for surveillance and monitoring at a physical store, and government policies toward digitization. AI in the retail industry revolves around how corporations have operated over the past few decades. Big data analytics and AI are crucial to digital business; they have the capabilities to transform everything from customer experience to business operations.”
The future of AI in retail
Retailers who want to maintain their competitiveness need to look no further than AI. By 2023, 83% of businesses are expected to be utilizing AI, and those that don’t run the risk of losing irreparable market share to rivals.
Many sectors use the term “artificial intelligence,” but few people understand what it implies. When we refer to artificial intelligence (AI), we are referring to a number of technologies, such as machine learning and predictive analytics, that can gather, process, and analyze vast amounts of data and use that data to predict, forecast, inform, and assist retailers in making precise, data-driven business decisions.
By utilizing cutting-edge AI analytical capabilities to transform unprocessed data gathered from the IoT and other sources into useful insights, these technologies are even capable of acting autonomously. Additionally, AI in retail makes use of behavioral analytics and consumer intelligence to improve a variety of customer care touchpoints and gain insightful knowledge about various market demographics.
Benefits of AI in retail
Although the benefits of AI in retail industry are unpredictable today, we can list the areas where it is most effective:
AI has grown to be a crucial part of loss prevention, especially in the context of self-checkout technology. For instance, AI is included in the scanning and video systems at self-checkout stations to learn more about how theft occurs. The AI is intended to detect any unusual transactions and even notify your personnel if any shoplifting occurs in real-time.
But keep in mind that a reliable shop security system also safeguards its property without jeopardizing client privacy. Authentication only logs the data of authorized personnel who have chosen into the system, as opposed to recording information on alleged shoplifters without customers’ permission. By doing this, you can protect your customers’ privacy while also maximizing the security of your brick-and-mortar store and reducing your financial losses.
Automating tasks that were previously carried out by human employees is one of the biggest ways AI is changing the retail sector. This enables your staff to focus less on tedious tasks and more on resolving challenging customer issues. And doing this right away can enhance the customer experience, which will boost sales and profitability.
Market demand analysis
You can more easily predict the future market and customer demands with AI, which will help you better serve your customers’ needs. For instance, using AI, you can forecast customer behavior by looking at past consumer behavior patterns. Additionally, you can learn which areas of your physical store attract customers’ attention the longest.
AI can also give you data on the number of website visitors and user demographics if you operate an online business rather than a physically accessible store. After that, you can use this information to inform your marketing choices. For instance, the information you gather can assist you in customizing your upcoming marketing campaign to best suit the wants and needs of your target audience.
Supply chain operation
You may also use AI to improve the supply chain for your store. For instance, this technology can analyze your previous customers’ purchasing trends and notify you immediately when you are about to run out of a particular product. This is important because if your customers don’t feel confident that you’ll always have the products they require, they might patronize a different business. And that results in lost sales, which hurts your bottom line.
AI can also forecast when a particular product will be in higher demand throughout the year. As a result, you can start stocking up now rather than rushing to secure and display these popular seasonal items when customers start asking about them.
Finally, AI is revolutionizing the retail sector by making it simpler for you to maintain a positive client experience. For instance, chatbots that use AI can guide customers through stores and even make highly individualized product recommendations.
Customers don’t even need to look through your entire physical store or website to find what they’re looking for with a chatbot. Additionally, your chatbot can suggest products that pair well with one another, such as particular outfits and shoes or particular cheeses and wines.
If you sell apparel, you can even utilize AI to let customers input pictures of the ensembles they want, and the system will then propose matching items from your site. As a result, clients will continue to come back to you season after season for their apparel needs. This will immediately improve the customer experience.
AI in retail examples
Below we detailed four great examples of AI in retail projects:
Walgreens’ project of AI in retail industry: Flu spread tracking
If the flu is not appropriately treated, it can be uncomfortable, inconvenient, and even fatal. People can take action to maintain the health of their families if they have the appropriate information. Walgreens tracks the spread of the flu using information from the number of antiviral medications it fills at more than 8,000 stores. Customers can use the online interactive map to find out how widespread the flu is in their area, and Walgreens can use it to stock up on more flu-related products in infected areas. AI is empowering both the store and its customers.
Taco Bell’s initiative of AI in retail industry: Enabling customers to place taco orders on the go
There is no time to waste if you want tacos. The first restaurant to provide online food ordering with AI was Taco Bell. Customers can text or speak their order with ease thanks to Tacobot’s integration with Slack. Even customized and large group orders are possible with the bot. After every order, the bot responds with witty comments in classic Taco Bell fashion.
Walmart’s step of AI in retail industry: Developing robots to scan shelves
One of the biggest retailers in the world, Walmart, intends to employ robots to help monitor those lengthy aisles. In dozens of its stores, Walmart is testing robots that can scan shelves. The robots search the shelves for missing items, which need to be restocked or have their price tags adjusted. Human employees can now spend more time interacting with customers and making sure there aren’t any empty shelves thanks to the robots.
Olay’s project of AI in retail industry: Personalized skincare experience
Olay consumers can receive tailored skincare care with the aid of AI without needing to visit a dermatologist. Customers can use Olay’s Skin Advisor to take a selfie of their unadorned face and have the app utilize artificial intelligence to determine their true skin age. The app assesses skin health and offers personalized skin care regimen recommendations for problem areas.
North Face’s take on AI in retail industry: Finding the optimal coat for customers
Not sure which coat to purchase? North Face can support you there. The business uses IBM Watson’s cognitive computing technology to enquire about the wearer’s plans for wearing the coat and their activities. With the aid of that data, North Face is able to provide customers with tailored advice on the best coats for their activities.
AI is reshaping the retail industry for the better. Implementing AI improves your store’s ability to make wiser decisions, increase sales, and eventually improve customer retention. Therefore, there has never been a better time to start integrating AI into your regular tasks.
As you consider how to incorporate AI into your retail establishment, keep in mind the numerous advantages of the technology that were already mentioned. With the right AI tools, you can be well on your way to achieving a completely new level of business growth in the months and years ahead.
This interview, called “How tech will revolutionize retail,” published by McKinsey in 2021, still sheds light on the future of AI in retail.