The retail industry has undergone massive changes in recent years due to the increased use of Artificial Intelligence. To fully understand the nature of a business, you need to account for who your customers are. Knowing your competitors is essential because they can give you ideas on improving your offerings. Also, what kind of services do you offer to your customer? What type of experience do you provide to your future buyers? How much time do you have to keep them engaged with your brand? All this has significant implications for retailers as well as their strategies.
With more than $5 billion in projected investments between 2021 and 2028, the global AI market for retail is expected to reach more than $31.18 billion by 2028. Yet retail businesses are facing a lot of challenges, especially in the face of increasing competition and falling profitability. Retailers have used AI to make their operations more efficient while helping them gain an edge over the competition.
As AI enters the retail landscape, it promises to create new experiences that will keep us engaged and satisfied with everything we might be doing. In this article, we discuss ways that AI is transforming the retail industry with its benefits and examples.
The role of AI in the retail industry
AI is an important technology for retail. It helps customers find products. It also helps retailers in finding customers. For example, Zara creates personalization packages that tailor products for shoppers’ unique needs. MasterCard shoppers could get customized offers based on their purchase history, while Amazon’s Alexa shopping assistant uses AI to help customers search for items and navigate through the site.
Retailers can use this same technology to optimize their inventory and marketing campaigns using machine learning algorithms (a powerful technique that takes labeled data as training data) to analyze data about customer behavior on social media networks, like Facebook or Twitter (where most shoppers are now).
How AI is transforming the retail industry: Examples and benefits
AI is changing the market by helping brands select the most relevant audience for various campaigns and activities of theirs. AI takes care of multiple aspects like understanding consumer behavior, analyzing consumer preferences, and suggesting personalized recommendations for products and other kinds of services.
Computer vision with image processing technologies is used when developing AI models to help customers find items similar to images they upload or display when shopping online or through mobile apps. Here, we’re going to discuss the AI-driven solutions that change the retail industry:
Explore how AI can help you serve your customers better
AI is a great way to best serve your customer better. Here are some ways AI can come in handy:
Understanding your customers better so that you can provide them with more personalized experiences and tailor their interactions with the brand accordingly. For example, AI has been used to analyze customer data to predict future purchasing behavior or preferences, then recommend products or services based on those trends. This type of experience will likely improve customer loyalty by increasing engagement and satisfaction with brands over time (which ultimately leads to higher sales).
Understanding your business better so that it operates more effectively at scale. This includes using analytics tools such as machine learning algorithms which allow companies like Amazon or Uber Technologies Inc., among others, to manage millions of cars without any human intervention.
Theft prevention
AI has become a popular theft prevention tool because it is accurate, efficient, and multifaceted. It can uncover stolen merchandise and prevent shoplifting before it happens with real-time alerts or analytics that identify areas of customer demand or suspicious activity. Erroneous chargebacks are one of the biggest causes of theft in the retail industry. By incorporating AI into checkout systems and self-checkout stations, retailers can gather insights into how and why theft occurs. This way, they can identify new ways to prevent theft before it even happens that reduce the cost of stolen merchandise and increase the store’s profitability.
Examples of AI improving customer service: digital assistants and chatbots
Natural language processing (NLP) is a collection of algorithms that understand, analyze, and produce natural language. NLP is the study of how computers can process human languages. It includes both sense-making and information extraction tasks. Understanding natural language can help computers interact with humans more effectively and provide better services for businesses and consumers.
Chabot’s and Natural language processing (NLP) are still going through the early stages of adoption. Some companies believe that the application of these technologies in their operations could yield positive results. This is because NLP allows chatbots to know about products to provide answers when asked about any product.
That means chatbots powered by NLP can find information about a particular item and respond to queries accordingly. Several users say that this approach made it easier for them to find answers about different items in their stock. So, if you use such an approach when looking for a particular item, chances are high that people will be willing to buy it, too. We think that there does not need to be an investment. Just make sure you’re aware of it.
NLP is one step closer to becoming mainstream. Therefore, chatbots are currently used mostly in sales and customer service as they enable people to search online, compare prices, and even contact sellers to make purchases. But NLP can also assist retailers in making better decisions when purchasing certain items. These include forecasting inventory, inventory management, recommending prices, advertising, and more. There is no need to hire expensive consultants or developers.
In industries like retail, where margins are thin, marketing innovation can make a difference.
Marketing is an integral part of any business, and when it comes to retail, the importance of marketing innovation cannot be understated. If you look at a typical retailer's revenue statement, you'll see that marketing and innovation account for nearly half of all sales revenue. To understand why this is true, let’s take a look at how customer service plays an important role in retail operations:
Customers want help with their questions right away – not days later or weeks later when they need answers about products or services purchased online. They don't want to pay for shipping costs either, so there needs to be an easy way for customers who have questions about items purchased online.
The future of retail is inbound
Retail has always been a buyer's market. But now that the internet is an important source of information and purchase inspiration (and even more so with AI-powered recommendation engines), businesses are starting to see the value of being more customer-centric than ever before. That means they need to start focusing on data which means that they'll need systems that can help them collect it effectively and efficiently. And while this doesn't mean that every single business will adopt these technologies. It does suggest an opportunity for those who do want them.
The impact of this change and development in future
The retail industry is going through a significant shift with the use of Artificial Intelligence. The future will be much easier and more convenient, thanks to the introduction of AI in retail. The creation of voice-guided apps, the use of facial recognition, and the development of real-time inventory systems seem to be typical examples of the development in this field.
AI solutions, in general, reduce human effort. It supports employees with tasks, making them more efficient and effective. It helps to eliminate errors, avoid downtime, and deliver exceptional outcomes. Furthermore, it minimizes the amount of paperwork required, thereby increasing profitability. Overall, AI is bound to reshape many industries and help with a vast range of issues related to digital transformation.
Sum up
The retail industry is undergoing a massive transformation as technology becomes more sophisticated. Consumers continue to demand more personalized experiences, and retailers are looking for ways to drive better business results.
By using machine learning and AI to analyze data from social media platforms like Facebook or Twitter, retailers can make smarter decisions about products and services that appeal most strongly to specific demographics. This gives them an edge over competitors who rely solely on traditional marketing strategies such as TV ads or billboards, which alone don’t work if customers aren't engaged online.
Wish to know how big data can help you create a massive change in your retail business?
About the author:
This guest post is contributed by Melanie Johnson, an AI and computer vision enthusiast with a wealth of experience in technical writing. Passionate about innovation and AI-powered solutions, she loves sharing expert insights and educating individuals on technology.