Eight Ways Artificial Intelligence Is Disrupting the Retail Industry
The disruptive impact of artificial intelligence in retail is being seen across the value chain with AI emerging as a powerful tool for retail brands to gain a strategic advantage over their competition. Marketing research firm Tractica* has predicted that global AI revenues will grow from $643.7 million in 2016 to an excess of $36.8 billion in 2025.
In our earlier 2020 edition of this article, going the AI way was a consideration and points to look out for a good start. However, AI and other emerging technology adaptations have now become a necessity to be on par with the changing trends in the retail industry.
Read on to know how AI is disrupting and transforming the retail landscape in the post-covid world.
8 Ways AI is Disrupting the Retail Industry
1. Enhancing In-Store Experience
Artificial intelligence can automate in-store operations and reduce operational expenses in retail stores. It can replace sales personnel to assist customers in the store, reduce queues through cashier-less payment, replenish stock by real-time stock monitoring, and digitize store displays and trial rooms. I highly recommend AI for retailers who want to maximize in-store productivity and improve customer service.
To acquire and retain customers, analyzing customer feelings and emotions has become a vital factor in the current times. The global emotional AI market is expected to grow from about USD 19.5 billion in 2020 to about USD 37.1 billion by 2026 with a CAGR of 11.3%. Retailers have started using emotion AI technology that reads facial expressions and eye movements of consumers to understand their feeling about products’ pricing, packaging, branding in real-time. Due to this they can quickly identify gaps and areas of improvement, making emotion AI a lucrative trend worth keeping on the radar for retailers.
2. Chatbots with Emotion AI
Omnichannel retail has ensured that customer interaction doesn’t start and end in a retail store. Artificial intelligence solutions in retail can effortlessly improve customer engagement through interactive chat programs. With emotion AI, you can analyze and improve the interactions between your chatbot and users by deep-diving into their subconscious preferences. This allows you to create a more personalized and relevant conversation.
H&M’s chatbot on the messenger app Kik, which allows users to make a choice from recommendations, filters and style preferences, set the fashion brand ahead of its competition way back in 2016. Despite the technology being around for a while, many online retailers still do not use it. In 2022 and beyond, upgrading existing chatbots to deliver a truly human experience is crucial.
3. AI-powered Price Amelioration
In a price-sensitive market like retail, artificial intelligence solutions can provide valuable information for pricing strategy. These applications help enterprises to analyze the efficacies of multiple pricing models before arriving at the optimal price for their products.
With the help of AI, retailers can now adjust the price of their products and implement dynamic pricing based on a range of factors such as demand, competition, and seasonal trends.
4. AI in Supply Chain Management & Logistics
Retailers around the world lose money every year due to inefficient inventory planning. AI-enabled logistics management can predict demands for products by scrutinizing historical sales, location, buying trends, etc. This enables the retailers to have just the right amount of stock at all times. According to MarketsandMarkets, the global spending on AI in supply chain is expected to reach $10 billion by 2025 at a 45% annual growth rate. The demand for quick product delivery and enhanced inventory control is always there.
We have recently developed AI-powered drones, DigitRobo, for warehouse management that can reach difficult corners and update a central database with available inventory in real-time. All aspects of the retail supply chain, including inventory, staffing, distribution, and delivery, can be managed in real-time by implementing artificial intelligence.
5. AI for Retail Personalization & Customer Insights
Personalization is a key aspect in retail and Artificial intelligence solutions can provide them easily. The concept of exceptional retail experiences is built on the idea that despite advancements in technology, consumers look for human interaction and human touch when interacting with a business. Even with increasing number of online channels to shop, consumers expect the same level of personalization when it comes to their purchases. According to a study conducted by PricewaterhouseCoopers, customers are willing to pay 16% more for personalized experiences.
Therefore AI and ML capabilities have become crucial for retailers to deliver exceptional customer experiences.
Technologies like biometric and face recognition can identify customers revisiting a store and remember their likes and dislikes, recommend products and design promotions for them. Advanced AI algorithms can look into demographic data, social media impressions and digital footprints of consumers to decode their interests.
6. AI-based Intelligent Product Searches
Artificial intelligence in retail can also simplify product discovery for customers with visual search. Customers can now take a picture of a product they like in the real world and then use the picture to search for a retailer selling it on the web. Machine learning retail software can classify millions of items from various sellers and categorize them for customers within seconds, making product search and comparison easier than ever.
Online shopping is all about convenience, which begins by finding the right product as quickly as possible. It is thus important that retailers pay attention to their search functionality.
7. Streamlining Store Operations
Multichannel retail has made store operations complex. Store associates must play multiple roles in a warehouse. Their job is no longer restricted to receiving goods, stocking them, and managing inventories. They have to provide product information, keep track of promotional offers and handle merchandising. When done manually, this is time consuming and prone to errors.
AI in retail can streamline the work of a store manager by automating back-office activities and using robotics for quality checks. The time saved can be effectively utilized for other productive work.
8. Cashier-less Stores
A cashier-less store is a type of retail establishment that allows customers to shop without having to go through a traditional checkout process. It eliminates the need for customers to wait in line and pay at the till.
We have introduced the concept of a cashier-less checkout-free store model, DigitMart, wherein the customers can walk into the store, pick the item they want and leave without needing to interact with a cashier or any staff.. AI and machine vision technologies help to monitor and track the activities of the customers. The product items are auto carted, and bills are auto generated within seconds of exiting the store.
Initially, cashier-less stores were only used in small convenience stores. However, in 2023, we can expect to see a full-size supermarket being rolled out.
The Future Of AI
According to Mordor Intelligence, currently around 40% of retail and consumer products industry is using AI. This number is expected to go up to 80% in the next few years. The increasing number of companies investing in AI is an indication of the growing demand for technology. Business leaders need to be pragmatic in their approach while implementing AI as it is indeed a capital-intensive technology. However, early adopters can vouch for promising results eventually. AI can transform every aspect of retail businesses and cannot be ignored if you hope to achieve digital transformation.
About the Author:
Chithrai Mani is a keynote speaker, emerging-tech evangelist, and coach for executives on digital transformation from Richardson, Texas. His most recent speaking engagements include AI/ML, Blockchain, and Digital Twin. He is a prolific writer on emerging technologies and his articles have been featured on Forbes Tech Council.