AI in retail

With consumers expecting premium levels of service at the press of a button, it’s vital that businesses in the retail industry are at the cutting edge of technology. Expectations are higher, and competition is fiercer than ever, and as such, innovation and industry disruptions are more necessity than a luxury.

For decades, consumers have relied on friends and family, product reviews and tastemakers when making purchasing decisions. A loved one could recommend a particular brand of tools that’s worked well over the years. A consumer watchdog publication could inform and educate on which car models offer the most reliability. A fashion magazine could highlight the latest trends that speak to any style. But while each of these different influencers remains relevant to today’s buyers, shoppers seeking out buying advice are increasingly being guided by artificial intelligence.

Through sophisticated AI, retailers are diving deeper into personalization by building solutions that suggest the best products for a user to purchase bolstered by data-driven insights.

Thanks to powerful AI-driven supply chain management, retailers can easily track what’s in store, what’s being shipped and what’s in the warehouse; ensuring customers can get what they want when they want it. But to create a more personalized shopping experience, retailers are also putting together better product collections, embracing trends like “showrooming” and crafting entirely new ways of shopping.

Here’s a look at how AI-driven personalization is transforming brick-and-mortar retailing:

1. b8ta

Retailers long maligned the trend of “showrooming” — that is, trying out a product in-store only to make an eventual purchase online. AI-driven supply chain management has allowed omnichannel retailing to alleviate some of these fears, but new retailers like b8ta have embraced this trend even further by building new stores around the showrooming concept. Offering retail-as-a-service, b8ta is an open-concept store that offers companies a flexible way of selling through brick-and-mortar locations. Companies can showcase products in b8ta stores from online brands that desire a physical presence.

For consumers who wish to purchase something online but also want to see it in person, b8ta changes the game. And for online retailers with a wide range of SKUs or a limited desire to expand into physical retail, b8ta offers the best of both worlds by showcasing products for limited amounts of time. Combined with AI-gathered data for personalized product targeting, a manufacturer could take advantage of b8ta by offering a small sample of their most popular products that customers wish they could try out in real life.

2. Amazon 4-Star

If you’re buying a kitchen gadget, how do you know it’s the best kitchen gadget? Well, if you’re Amazon, you know it’s the best because it’s got a wealth of customer purchasing data behind it. This includes star ratings, which lets users rank products after they’ve been purchased.

That’s the core concept behind Amazon’s newest retail store in New York City: Amazon 4-star. Carrying a curated selection of products that have all received large amounts of four-star ratings, Amazon uses its sophisticated product recommendation engines to bring its bestselling, most popular items into physical stores.

By offering a hand-picked selection of products that are beloved, trending or hidden gems, the service allows customers to shop from a collection of highly personalized recommendations in a brick-and-mortar setting.

Considering 35 percent of Amazon’s revenue comes from its AI-enhanced product recommendations, it’s a profitable shortcut to give customers what they already want.

Selling only the top-rated products might also be the right approach for adjusting an existing retail strategy. In early 2018, home furnishing retailer Crate & Barrel shuttered all physical locations of its children’s furniture chain The Land of Nod and began offering a smaller, curated collection of the same products under its in-store label, Crate & Kids. For Crate & Barrel, it became clear that offering a more personalized selection of products to its customers was more valuable than propping up an underperforming retailer that featured wider selections.

3. AlgoFace

Buying new makeup can be a long and messy process. Dropping by Sephora or the makeup counter at Macy’s means waiting for an associate to help you apply lipstick or eyeshadow to find the perfect color — from a tube that’s already been used by somebody else.

AlgoFace is making this process simpler (and far more sanitary) through its virtual-makeup SDK, which is available for makeup retailers to build into their apps. Shoppers can virtually apply an endless array of makeup shades to a live video of their face. Their AI-driven augmented reality interface makes it look like users are actually, physically wearing the makeup they’re thinking about buying.

The result isn’t just a highly personalized experience that lets users try out makeup combinations with no mess: It’s an incredible way to cut down on costs by saving on makeup samples. As for customer experience, this means being able to try out different looks in a mobile app or at a physical location.

How AI can transform the retail customer experience

It then comes as no surprise that retail businesses are projected to spend $7.3 billion on AI by 2022 — with the majority of that money dedicated to transforming the customer experience.

Through the strategic and nuanced implementation of AI, retailers will offer customers a more personalized, intuitive, and convenient experience, leading to enhanced levels of brand trust.

Such a dramatic technological shift in the industry is evidenced by leading retailers — such as Amazon, Dominos Pizza, and Walmart — making AI a significant facet of their business model.

1.Improved Delivery Logistics

Since Amazon is a leader in almost every aspect of retail and eCommerce, it’s no surprise that it’s breaking some serious ground with AI.

Amazon’s thirst for AI innovation is no more evident than when in July 2016, it partnered with the UK government in developing drones to make small parcel deliveries. Currently, the eCommerce giant is working with regulatory agencies towards implementing the technology.

Known as ‘Prime Air,’ Amazon’s drone delivery service is a future delivery system dedicated to the safe transportation and delivery of packages up to 5 pounds in less than 30 minutes.

In December 2016, the first 13-minute unmanned flight of a drone was launched. At this point, Amazon steadfastly aims to determine optimal safety and reliability parameters ASAP. While there are no projections for commercial use, there’s plenty of collaboration with regulators in a multitude of countries.

If all goes according to plan, it seems entirely plausible that within the next decade, instantaneous AI air deliveries to customers will be a reality.

2. Personalization

Another way the retail industry is leveraging AI is its use of chatbots — which offer customers the convenience of their own personal shopper at no additional fee.

For instance, Walmart’s “Hoo the Owl” asks questions to future parents registered online. The chatbot finds out the baby’s due date, gender, and nursery theme then customizes suggestions depending on the answers. Walmart intends to enhance the levels of personalization by adding more questions about organic and sustainable products.

The shopping experience is brought directly to Walmart’s customers with its savvy implementation of AI technologies. Instead of customers aimlessly searching for ideal products, Walmart’s chatbots ensures that the best choices fall directly into their laps.

Cosmetic industry juggernaut Sephora applies the same principles with chatbots, offering each customer ideas on new makeup looks. Sephora’s chatbot is an in-store tool too, providing product recommendations, reviews, and ratings during a visit to any one of their stores.

3. Improved Customer Communication

Beyond personalization, AI also lets customers contact businesses no matter the place or time. Without AI, there is a litany of factors preventing customers from getting in touch with reps. In most cases, the phone lines are too busy, or it’s no longer operating hours.

While chatbots can’t adequately respond to every customer query and complaint, they filter through the simple issues, allowing the human agents to focus their energies on more challenging circumstances.

What’s more, is these bots are highly adaptable, handling increasingly more difficult complaints. Then, once a situation exceeds a chatbot’s capabilities, it directs the issue to a live rep.

Immediate access to these chatbots increases both customer satisfaction and productivity while decreasing the operational costs of customer service.

Domino’s Dom the Pizza Bot provides immediate responses to customers with hilarious and engaging content. Dom also gives customers the choice of fully automated ordering experience, or they can talk to a live agent.

It’s this kind of savvy thinking that led to Dominos knocking Pizza Hut off its throne of ‘largest pizza company in the world’ at the beginning of 2018, after generating an astonishing $12.3 billion in global revenue.

It behooves retail companies to see that the future is now. The quicker they start utilizing AI, the more they’ll remain at the head of the pack.

Nearly all the market segments, industries, and business domains are actively interested in AI and are looking to harness the technology for business benefits. AI offers companies the power to reduce costs and make the shopping experience much more delightful and efficient for the end consumers. Naturally, how can the retail segment stay away from the promising technology?

The Retail-AI Syndicate

According to Global Market Insights, investments in AI by retail segment will exceed USD 8 billion by 2024. As more applications for machine learning, predictive analytics and deep learning technologies are experimented with success, digital disruption in retail segment is bound to happen at a much rapid pace.

Globally, AI experts believe that the technology offers a wide range of applications for the retail segment. In the coming year, retail will see greater infusion of AI-based solutions in day-to-day operations. AI will definitely change the customer service cycle in retail and both retailers as well as the consumers are bound to benefit from the AI-Retail syndicate.

The AI Impact

Artificial Intelligence can serve as a boon for retail companies that gather and possess customer data. AI can derive meaningful conclusions from massive amount of data and help companies to create personalized shopping experiences via highly-structured web shops, intelligent in-store bots and online chatbots. Let us see how AI will transform the retail experience for the shoppers in 2019.

• Digital Racks for Apparel & Fashion Products

With the help of AI technology, apparel retail brands can create virtual racks and trial rooms with gesture walls and touch-free monitors to find the right style, without having to shuffle through a pile. Customers can instantly see how a dress would look on them and can browse through recommendations based on their preferences and style quotient.

All this will not only enhance the shopping experience but will help customers to choose from millions of options, that is currently not possible due to space constraints inside a physical store. With AI, a store can be converted into a bustling repository of design and draping ideas that users can choose from. Also, stores will be able to gather deeper insights into consumer behaviour, optimising their product portfolio for much better retail experience delivery.

• Virtual Trial Rooms for Swift Decision Making

While shopping for a new dress or an apparel, trying out different options can get quite frustrating and time consuming. With the help of virtual trial rooms equipped with digital mirrors, customers can actually try dresses without having to change again and again.

Using a gesture and touch-based interface, a shopper can mix and match various outfits, accessories, shoes, etc. to finalise the perfect look, in no time. Not only for apparel brands, virtual mirrors can make it easier for cosmetic companies and beauty brands to portray how a lipstick shade or foundation would appear on real skin without forcing customers to apply the product.

• Robotic/digital assistance will be a reality

Using AI, smart analytics and natural language processing technology, retail stores can give customers the power to get instant support, inside the stores. By placing robots and touch panels, stores can help customers locate an item, get answers to their queries and find out how a product can make their life easier.

With the help of customer service bots powered by AI, stores can reduce their manpower costs and provide 24x7 assistance to the customers. Not only will it improve customer service levels but will definitely attract more buyers to the store in 2019.

• Behavioural Analytics Powered by AI-backed Surveillance

Using modern surveillance equipment powered by AI and computer vision technologies, retailers can capture and study customer behaviour inside stores. This will help them understand engagement levels with current store layout and optimise operations for higher engagement and revenues.

Video analytics can also improve in-store security and reduce the chances of theft. With the help of AI, surveillance footage can be monitored in real time and alerts can be sent to administrators, store owners for immediate action.

• Better Customer Support via Chatbots

AI-powered chatbots are enabling retail brands to engage customers, efficiently. With the help of chatbots, brands can handle thousands of queries simultaneously, without having to employ a large workforce.

Chatbots can be configured to answer questions, provide shopping suggestions and provide prompt support. Using a mixture of AI chatbots and humans, brands will be able to effectively handle customers and provide users with a better resolution of their problem. When customers will get prompt and personalized attention, they will engage deeply with the brand, paving way for enhanced customer loyalty.

All these scenarios are not just a fantasy but will be experienced by retail shoppers in the coming years. Artificial Intelligence will rule the retail domain and help brands become more customer-centric and efficient in retail operations.