When you hear the word AI, what do you imagine? An automated system, where all you have to do is relax, give commands and check the results. Or maybe a robot that is making life way too easy and luxurious. It may not be that amazing yet, but in either case, you know one thing for sure; it is undoubtedly going to help you in your work and provide you time and space to complete other tasks.
According to reports by MarketsandMarkets, globally, AI in retail is expected to grow from USD 736 Million in 2016 to USD 5,034 Million by 2022, at a Compound Annual Growth Rate (CAGR) of 38.3%. The reasons for such massive growth are adoption factors such as monitoring physical stores, surveillance and growing awareness of AI in the retail industry. The objective to improve user experience, enhanced application, better productivity, an increase in the return on investment (ROI), maintaining inventory accuracy, and supply chain optimisation.
Machine learning, computer vision and natural language processing (NLP) technologies are expected to develop highly advanced AI-based solutions for retail, and creating growth opportunities for the market.
That’s why artificial intelligence in the retail industry is considered to be one of the fastest-growing verticals today.
The growth is not only taking place one-sided, meaning that AI and the market are growing simultaneously. Here we talk about the factors contributing to market growth. AI and market development are going hand in hand with the increasing investments in AI by retail companies and the expansion of e-retail. AI has helped retailers automate their work processes, examine consumer behaviour, and secure relevant data by utilising these advanced technologies.
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Many global retail companies are implementing AI technologies in their stores and warehouses or virtual stores. They are increasing supply chain upgrades to improve the shopping experience for customers and accelerating revenue.
Let’s understand how AI is giving companies the power to stay competitive in the market and providing a more delightful shopping experience to consumers.
Product Categorisation and Recommendation
AI in the Retail Industry is a blessing in disguise. Companies use machine learning to tag millions of products and display them to the right users at the right time. Product categorisation, recommendation and planning holds the most significant AI solutions market share and will continue to do so. Retailers use AI to offer a personalised experience to customers and give recommendations based on their past purchases.
This personalised product recommendation, also known as automated merchandising is valuable for eCommerce and stores to optimise product purchases. AI-based algorithms compare and analyse the product assortment of brands, market trends and customer shopping history. Based on the analysis, it then predicts the relevant items to be added to the inventory for more optimized sales and increased revenue.
As an example, a company like lafofo enables sellers to upload pictures of the goods that they want to market. Once the image is uploaded to the site, the product is automatically priced and placed under the right category with the use of machine learning.
Virtual Trial Rooms
While shopping for a new dress or apparel, long lines outside trial rooms can get quite frustrating and time-consuming. Through the use of virtual trial rooms equipped with digital mirrors; customers can try dresses or gadgets without having to physically change over and over again.
Using gesture and touch-based interfaces, a shopper can mix and match various outfits, accessories, gadgets to get the perfect look. Virtual trial rooms are not only limited to apparel brands, virtual mirrors and apps have a wider scope for cosmetic and beauty brands. It is not suitable for customers to remove applied makeup and test new products just to see how they look. Virtual rooms combined with mobile apps are a great help to depict how a lipstick shade or foundation would appear on real skin without actually applying the product.
In the case of accessories, Lenskart, an Indian optical prescription eyewear retail chain, gives its customers a platform to virtually try thousands of frames and eyeglasses online. People can compare different frames and choose the one that best suits their face.
Customer Support Chatbots
Chatbots are everywhere. AI-powered chatbots are enabling retail brands to interact and engage with customers efficiently. Chatbots help brands handle thousands of queries simultaneously, without needing to indulge a large workforce.
Chatbots are not just confined to answering questions or raising a ticket; they are well versed in providing shopping suggestions, support and resolution to a users’ queries and problems. Retail bots help shoppers locate and select products while making recommendations. Some chatbots are designed to send personalised marketing alerts and store invitations to customers. They handle and collect feedback from customers and reply promptly.
With such an effective helping hand, bots make sure that customers receive personalised attention and care. This engagement of clients with the brand paves the way for enhanced customer retention and loyalty. For example, brands like H&M, Sephora, Nordstrom, and others, are already using chatbots for product discovery and purchase.
Digital Assistants
Retailers have started investing in technologies that help customers while shopping and employees while assisting. Digital assistants are the next step in human efficiency, media consumption, and online shopping. Placing robots, touch panels and voice assistants at stores or online can help customers locate an item, get answers to queries and quickly find relevant products.
The popularity of digital assistants can be noticed from Amazon’s Alexa to Google Assistant to Apple’s Siri that allows people to give a command and order goods from stores. A single command quickly recommends the best deals and where to find them.
Appliances are using smart methods to give users engaging suggestions. For example, at CES (Consumer Electronics Show) 2017, LG introduced an Alexa-enabled smart-fridge that suggests recipes that include the spinach that is expiring soon. Once an ingredient is finished, it will prompt you to order more. The fridge also reminds its owners of birthdays and anniversaries of family and friends.
Another example is Lowebot, an autonomous in-store robot from Lowe’s Innovation Labs that helps customers find what they require at the store in different languages. The bot also helps with inventory management through real-time monitoring capabilities.
Customer Behaviour Prediction
Some Artificial Intelligence platforms enable business owners to make use of behavioural economics and build an individual approach to each customer. Behaviour prediction is vital to know the buying patterns of customers. It helps understand the consumer mindset, their habits and buying patterns.
Using AI-powered modern surveillance equipment and computer vision technologies, retailers can now record and study customer behaviour in stores. It helps them understand consumer engagement levels with the current store layout and optimises operations to eventually increases revenue.
The AI platform uses learning algorithms to understand customer responses and behaviour during previous shopping experiences and calculates optimal pricing offers for a particular visitor.
An Ending Thought
All the above discussed scenarios are being experienced by the shoppers, and there is a lot more that can improve. Artificial intelligence is all set to dominate the retail sector and help brands become more customer-centric and efficient in retail operations.
With several players in the market, competition in AI in the retail industry is becoming intense especially with both global and regional players offering AI solutions and services. The technology penetration is on its way to reshaping the entire inventory management and operation cycle, providing a renewed experience to consumers.
Not only will the efficiency and sales of the retail space see an upsurge, but through the proliferation of AI in the retail industry, the worldwide economy will also progress massively, opening doors for hi-tech start-ups and a plethora of new job opportunities.
Are you ready to embrace the new potential of AI? Let us know your thoughts about the increasing use of AI in retail in the comments section.