To say artificial intelligence is taking the world by storm would be an understatement. People working in various industries — from healthcare to education to construction — are exploring ways to use AI, and the retail sector is no exception.
In fact, the AI market in retail is expected to grow from $4.84 billion to $31.18 billion by 2028 — representing a CAGR of 30.5%.
When implemented properly and appropriately, AI can transform the way retailers operate and give merchants intelligent tools for streamlining their operations and improving the customer experience.
To give you a better idea of what the technology looks like in retail, here are four interesting use cases of AI in-store and online. Take a look, and see if you can implement these in your retail organization.
Better insights and smarter decisions
AI can crunch the numbers on massive amounts of data in ways that humans can't — and that's a good thing. It means you and your team can spend less time pouring over data and devote more energy towards taking action.
There are already some excellent tools that enable retailers to tap into the power of AI and analytics. From e-commerce reporting tools that shed light on actionable insights to inventory management software that can provide dynamic reorder reports based on your store's stock movements, decision-making is much easier with AI.
You can also use it to optimize your pricing strategies and forecast demand, ensuring your stores have the right products at the most optimal times.
As the technology continues to advance, we can expect to see more and more retailers leverage AI to make smarter decisions and deliver more value to their customers.
Improved customer service
Customer service is perhaps the most familiar use case of AI. We've all likely interacted with chatbots or virtual assistants that help us with common tasks like answering FAQs, troubleshooting issues, or routing requests to the right customer support team.
That's not all; advancements in the field are increasingly helping businesses level up their customer service. AI-powered natural language processing tools can further enhance chatbots to understand and respond to customer inquiries, feedback and reviews in a more human-like and conversational manner.
What's more, AI technology enables these tools to go beyond simply answering questions. Retailers could leverage AI-powered software to help shoppers find items they need or to proactively offer product recommendations based on their browsing activities.
This brings us to our next use case.
Hyper-personalization
While many retailers have long been using machine learning and predictive analytics tools to send timely, personalized messages (like marketing emails) to customers, the rise of artificial intelligence has paved the way for hyper-personalization by allowing retailers to tailor their initiatives for each individual customer.
Sephora's Color IQ foundation matching service is a great example of this; it uses AI technology to help customers find the right foundation shade. This highly personalized approach to beauty retail not only saves customers time and effort but also creates a more enjoyable and seamless shopping experience.
Or, consider the AI-enhanced grocery delivery service Hungryroot, which employs a sophisticated recommender system that learns and adapts to each customer's unique preferences. By collecting data on budget, family size, dietary restrictions and favorite foods from the customer, Hungryroot assembles personalized grocery lists on a weekly basis.
Streamlined in-store operations
Artificial intelligence makes the lives of in-store teams and customers easier, too.
Take for example, self-checkout equipment that uses computer vision and scanning systems to streamline checkout. These systems can also detect suspicious behavior, thus aiding retailer's loss-prevention efforts.
Meanwhile, Amazon's "Just Walk Out" technology utilizes a combination of computer vision, sensor fusion and deep learning algorithms to detect when customers pick up or put back an item from the shelves, and charge their accounts accordingly.
As AI technology becomes even more prevalent and accessible, we anticipate more AI-powered solutions to make it to physical retail stores.
Bringing it all together
AI is transforming the retail industry in a multitude of ways, from better insights and business decisions to improved customer service, hyper-personalization and streamlined in-store operations.
As impressive as these advancements are, it's important to remember that AI is still in its early stages. We'll be seeing even more innovative AI use cases emerge in retail, so the best thing you can do is to keep yourself abreast of the latest developments and find ways to adapt.
Partnering with forward-thinking solution providers is another important step to ensuring you have a competitive edge in today's retail landscape.