The retail industry is facing the headwinds of technological change and is quickly rising to the challenge. Retailers across the United States announced 8558 store closures in September 2019, according to a Coresight Research report, while also reporting 3446 new store openings in the quarter. The good news is that that technology which has changed the way customers shop is also leading the way forward. Retailers are now exploring into the ways they can use artificial intelligence to improve the shopping experience, build customer loyalty and draw more footsteps into stores.
How AI helps retailers
Retailers have always made use of data on customer behaviour and trends to make their business decisions. But with AI and machine learning, retailers will now get a better picture of their customers and therefore can do a more accurate job of forecasting. Machine learning helps retailers learn from the past and apply those lessons to the inventory and supply more precisely than was possible before. This improves operational efficiency for the organization. For example, by using IoT, AI can leverage the data that is generated by the sensors that monitor production and movement of products and better manage inventory and supply chain.
Examples of AI in retail
A few retailers are leading the way in showing how AI can improve operations. The North Face, an American apparel brand, is the first to use IBM Watson’s AI in retail. The North Face mobile app can provide a choice of apparel that is specifically and narrowly customized to the customer’s individual preference, instead of a plethora of choices. This is significant on the e-commerce platform. 70 per cent of carts are abandoned by shoppers before checkout, as customers are faced with a dilemma of having too many options – and there is uncertainty if they have chosen the right one. By presenting them with a closely customized selection that is in line with their preferences, there is reduced risk of cart abandonment.
Luxury retail store Neiman Marcus is ensuring that it meets the customer everywhere and it uses AI to ensure that the customer experience is top-notch and personalized every time, everywhere. It’s Snap Find Shop app helps customers input pictures of their favourite items and scan the Neiman Marcus inventory for similar pieces instantly. In stores, sales associates have AI-driven devices that will help them present more accurate and personalized selections to customers, which significantly enhances the customer experience.
Walmart has given a glimpse of the store of the future with its Intelligent Retail Lab (IRL). With AI-enabled cameras, interactive displays and a large data centre, the IRL explores the possibilities of AI within the physical store with 50,000 square feet of physical retail space.
One of the key areas that AI will help Walmart is to streamline and optimize product inventory and availability. AI will help them use real-time data and analytics to trigger stock/supply notifications to employees and alert them if supplies are running low. While this may sound simple, it is a complex task to automate – from detecting products, recognizing the specific product and comparing the quantities on the shelf to the expected sales demand.
Retail is going to become more personalized in the near future, and AI will be the key to retailers to develop a highly accurate level of customization. The aim, ultimately, say experts, is to help customers choose more quickly and experience a seamless way of shopping across digital and physical stores.