According to Cognizant’s recent study with Oxford Economics, generative AI is expected to have a $1 trillion impact on the economy by 2032. In particular, generative AI is revolutionizing the shopping landscape to create more personalized and memorable experiences for consumers.
As retailers come to terms with the boundless potential of generative AI, Cognizant has identified three key areas where this technology will make the most significant and immediate impact: commerce, marketing and customer service. To stay ahead in this emerging retail revolution, companies must take strategic steps to harness these advancements effectively.
1. Transforming Commerce to be Conversational and Curated
With generative AI, commerce will shift from structured — where retailers help shoppers find the products they need from thousands of inventory items — to “conversational.” Specifically, technology like AI-enabled chatbots, messaging apps and other automated technologies are helping brands communicate directly with customers in a more natural way. Retailers and brands that leverage this technology have another distinctive advantage: generative AI can grasp nuance and context better than traditional search engines, which results in more personalized and curated shopping experiences for users.
In the traditional shopping experience, a customer uses a search or navigation menu on a site to view, for example, sunscreen options. The user can filter by price, shade, brand, style, etc. But by introducing generative AI to the equation, which factors in past customer data and purchase history, the technology would understand what the customer is specifically looking for, such as an all-natural sunscreen that is free from synthetic chemicals and additives. Furthermore, insights from the shopper’s current search can be applied to future shopping experiences and nuance would be incorporated into future search results.
Companies already are seeing the benefits of introducing generative AI into the shopping experience. One notable example is Ebay’s generative AI-powered ShopBot. Users can interact with ShopBot via text, voice, or by sharing a photo similar to what they’re looking for to help them find products curated to their preferences. With this approach, Ebay has helped shoppers find the best and most relevant products from their vast inventory of over 1.1 billion items.
2. Achieving One-to-One Personalization in Marketing Campaigns
One of the most talked-about use cases of generative AI across all industries is the near instantaneous production of written content, such as emails and social media posts. For retailers, the value of generative AI lies not only in its content creation capabilities but also in its ability to integrate customer data, resulting in highly relevant and personalized interactions.
Many brands are already using generative AI to work on personalized campaigns. Farfetch uses a generative AI tool called Phrasee to improve its email marketing campaigns. Phrasee tests different phrases and writing styles, optimizes email subject lines and personalizes the body copy of emails to increase engagement and drive higher conversion rates. The results were clear: Farfetch’s open rate increased by 7% for promotional emails and by 31% for event-triggered outreach, such as abandoned cart messages.
Generative AI also can be used to engage with product descriptions and reviews. For instance, in August last year Amazon announced it was experimenting with generative AI to analyze and summarize product reviews. The goal, according to the company, is to reduce the amount of time shoppers spend scanning reviews to manually deduce the “pros and cons” of each product.
3. Elevating the Customer Support Experience
Customer support in retail is as important as ever: Research found that 93% of customers are likely to make repeat purchases with companies that offer excellent customer service. Today’s retailers have every incentive to ensure all customer inquiries are promptly and adequately addressed.
Two key applications of generative AI in retail customer experience include developing AI bots for customer service agents and sales enablement tools for in-store associates. For example, AI-driven tools can quickly access all relevant customer data and suggest the best next actions or product recommendations.
Enhancing service speed and accuracy with AI can significantly boost customer satisfaction and loyalty while also improving job morale for agents and associates, potentially reducing turnover. Additionally, generative AI can simulate real-world scenarios to better prepare associates for challenging customer service interactions. And generative AI can assess the tone of a customer’s voice to customize responses. For example, if an AI tool detects frustration due to a long wait time, the agent might offer to follow up with the customer after the issue is resolved.
The Dawn of a New Shopping Era
The future of retail is undeniably intertwined with generative AI. From commerce and marketing campaigns to customer engagement and support, customers will begin to expect a new level of hyper-tailored shopping experiences across the board.
Retailers that embrace generative AI will not only enhance customer satisfaction to reach these expanding expectations but also will streamline operations and empower their workforce. The era of AI-driven retail is in full swing, and those who adapt will continue to define the dawn of a new shopping era.