With the recent advancements in artificial intelligence (AI) technology tools, the retail industry has already seen big changes in the last few years—and there’s plenty more to come.
Customers are embracing this new technology in their personal and professional lives, taking advantage of services once reserved for an elite few, now available to everyone with a computer or smartphone. And customers are learning quickly that adding a few time-saving luxuries to your routine can make life a whole lot easier.
The average person can use an AI virtual assistant to send emails, manage their calendar, and order their groceries automatically. Even putting yourself on the job market has been made easier—AI can be used to quickly update your resume, develop your cover letter, and optimize your LinkedIn profile, complete with a professional headshot produced with an AI image-generator like Portrait Pal.
Let’s take a look at AI from the shopper’s perspective to examine some ways many retail brands have started incorporating AI into their business operations, and why most retailers should be willing to adapt and join the AI frenzy or risk being left behind.
Best Uses for AI in Retail
Many retailers have already incorporated AI into their business models to save on costs and time, using it to optimize pricing, forecast demand, manage inventory, and create a more personalized shopping experience for their customers.
Price Optimization
One thing that AI systems do well is take in large amounts of data and analyze it, determining the optimal outcome for any situation. In retail, pricing strategies are constantly changing, and how the new prices are set depends on many factors.
An AI pricing system can help set new and future prices based on historical data like buyer behavior and market trends or external factors like your competitor’s prices and general economic data. It would be nearly impossible for a team of human analysts working around the clock to set optimal prices for your merchandise at any given time with as much speed and accuracy as the right AI system.
There are several available AI services you can use to help with price optimization, including Wiser, Revionics, and Relex Solutions. Each one offers various other features you may or may not find useful, but you should expect a sharp increase in profits and customer satisfaction from using this kind of AI to optimize your prices.
Demand Prediction
The retail industry is all about supply and demand. You can use AI tools to analyze large amounts of data to forecast which products will have the highest demand, and when. The accuracy can be much higher because the AI can sort through all of the data at a faster pace than any human analyst can.
The AI model can make accurate predictions about future demand based on past market trends as well as the historical data from each of your stores, including events or special promotions, seasonality, and even the demographics of your customer base.
Inventory Management
All retailers know that managing inventory is a precarious balancing act. On one hand, you need to keep enough inventory in stock to meet the needs of your customers. But you also don’t want too much inventory that you don’t need taking up valuable warehouse space. Sometimes the flow of business seems too unpredictable to know exactly how much product you need at any given time.
One of the pioneers of using AI technology to manage its inventory is retail giant Walmart. Cameras attached to their floor scrubbers help calculate remaining inventory on the shelves, taking more than 20 million photos per day across all stores. That info is all sent to an AI-powered data center, which then makes appropriate adjustments to the inventory for every store.
For smaller businesses with less physical space to store extra inventory, this technology is useful to prevent overstocking merchandise that doesn’t move quickly or from selling out of popular items before you have the chance to replenish your stock.
Personalized Consumer Experience
It’s been decades since retail has expanded beyond the traditional brick-and-mortar stores to the internet, meeting the needs of consumers who prefer to do most of their shopping online. Virtual stores are not only another sales tool, but also a goldmine of data that can be used by AI machine learning algorithms to customize the experience of every customer.
The AI-driven analytics tools can use all of the available data, including the customer’s browsing behavior, purchase history, favorites list, physical location, age, and other factors to recommend specific products they would likely be interested in.
To operationalize this personalization across channels, many retail go-to-market teams are adopting GTM AI as a context and intelligence layer that unifies CRM, product, and behavioral data to prioritize audiences, trigger timely offers, and measure impact from awareness through repeat purchase.
Aside from personalizing your marketing efforts, some advanced AI tools can help the customer get the full experience for how they’ll use the product before they buy. For example, someone shopping for furniture can upload a photo or room measurements and the AI can create an image showing exactly how the piece would look in the home.
Customer Service
With more customers shopping online comes the need for customer support to be available 24/7. AI-powered chatbots can be trained to answer questions and provide support instantly. This can increase the efficiency of every online purchase and reduce the frustrations of customers who may otherwise have to wait on hold or pause their shopping until they can call during operating hours to get the answers they need.
Additional features can be integrated through AI-powered customer service, such as making reservations for in-store services, troubleshooting any technical issues with the site, or coordinating a return or refund.
Some retailers have even started incorporating in-store uses for AI to improve the customer’s shopping experience. These include store-affiliated apps that can be used to apply discounts for loyalty card members by scanning products while shopping, or cashierless checkout options that allow customers to just walk out of the store with a full cart—their credit card can be charged automatically for every item later.
AI in Retail Is Here to Stay
AI has already made a big impact on the retail industry—and it’s here to stay. The strengths of machine learning and AI-driven analytics fit in perfectly with the fast-paced, high volume world of retail. It’s a useful tool for identifying patterns, analyzing large amounts of data, and making predictions based on past and current market trends.
The more you learn to use AI and machine learning tools in your retail business, the more informed you’ll be in major decisions regarding inventory management, price optimization, and customer service. These tools can help reduce overhead costs while increasing sales and improving the overall customer experience.
