Within the past couple of years, artificial intelligence has transformed the landscape for a wide of industries. This groundbreaking technology finds some of its best applications in the retail sector. Due to its high cost and proprietary systems, this technology is yet inaccessible for small businesses. However, the majority of the big businesses are actively evolving their systems and improving customer experience by hopping on to AI-based operations trends. That’s because there is an array of benefits that this technology can bring to the actual businesses. Before we get into the ways AI can improve the retail industry, let's see how AI even works.
How AI works in the retail industry?
Artificial technology uses AI algorithms like neural networks to run big data sets. Once the data is processed, it produces a model. This model offers answers to all the questions one formerly had just like a person. These answers are based on the information this technology was able to learn with the help of the provided dataset on a particular matter.
According to a survey conducted by Capgemini, artificial intelligence has the potential to save retailers more than USD 340 billion on an annual basis. It can improve various processes and operations by enabling efficiency. This is one of the major reasons why retailers are leaving their old methods behind and turning to this technology as AI can improve the retail industry.
Practical Ways AI Can Improve the Retail Industry:
Artificial Intelligence technology increases the efficiency of operations. More efficiency equals more profit. There are various ways this AI can improve the retail industry. It not only reduces the cost associated with product manufacturing and shipping. It also enables businesses to offer their audience an impeccable customer experience. according to the research conducted by Tractica, with the help of Artificial Intelligence technology the global revenues can be increased up to USD 36.8 billion by 2025. Here are eight practical ways AI can improve the retail industry:
1. Better accumulation and organization of data:
One of the biggest innovations brought about by Artificial Intelligence technology in the retail sector is a better accumulation of extensive customer data. By processing this data, retailers can offer their customers a more personalized shopping experience. This data enables brands to know their target audience and what they like. The information acquired also allows them to determine how well the recently launched product will perform in the market. Companies can make strategic decisions by learning from the past experiences of the customers to achieve fruitful outcomes.
2. Recommendation of suitable products:
When shoppers go for in-store shopping, there are a number of sales associates present to help them navigate their journey to the cash counter and make a purchase. These salespeople also try to understand the preference and the liking of the customers and suggest his products accordingly. With the help of artificial intelligence technology, this service is replicated online and is available for eCommerce websites. Just like a real-life sales associate, the AI recommendation system tries to understand the needs of the online customer and suggest to him the products most relevant to his search.
The integration of this technology has a straightforward impact on a business’s growth. The average amount Americans spend on clothing is $161 per month. More than 50% of the sales on Amazon are driven by the AI-recommendation engine. These engines not only take the shoppers’ shopping pattern and behavior into account but also considers other shoppers’ habits who are interested in purchasing similar items.
3. MAP Monitoring:
MAP is also known as Minimum Advertised Price. It is the lowest price a retailer can sell products for. If a product is sold below its MAP price, it can have a negative impact on the overall business for retailers. It also tarnishes the reputation of a brand. Therefore, to avoid that from happening, it's important to figure out the sellers who are violating the MAP pricing rule.
To improve eCommerce businesses, Retail analytics firm, Intelligence Node, uses AI. This is how they prevent sellers from violating MAP pricing. This technology makes it possible to keep track and monitor the products being sold in real-time. If someone is found to be violating MAP, a report is delivered to the brands. They can then track down the reseller and take actions against them.
4. Visual search:
Sometimes, customers have to spend hours and hours in search of their desired products. There are times when their power to purchase is lost by the time, they find the good they were searching for. It is called “buyer burnout”. The best way to stop that from happening is to make it quick for the customers to find what they have come looking for.
While the customers are shopping in-store, you can save them from buyer burnout with the help of computer vision technology. With the help of machine learning, consumers can take photos of the fashion goods they want to purchase. They are then recommended similar or the most relevant products available on the website or in-store.
There are various big companies such as Amazon and Macy’s that have already been using this technology to help customers in finding their desired products in a matter of time.
5. Running targeted Marketing Campaigns:
AI algorithm makes it exceptionally easy for the brands to run targeted marketing campaigns. It makes it easier for them to design advertisements based on the preferences, regions, purchasing pattern and behavior of the target audience. By doing so, they improve their conversion rates.
AI can improve the retail industry by creating ads specific to the users’ interests. Companies can increase their conversion rates to up to 2-3% by incorporating AI in their marketing strategy. This also allows brands to improve customer retention and loyalty.
6. Predicting demand:
To optimize the supply of any product, it is important to predict its demand. This helps to minimize the cost associated with unnecessary inventory and improving inventory turnover. This also allows controlling the out-of-stock issues in the stores where the product demand is high. The demand forecasting tool helps brands with various aspects of optimizing the product supply. You can also plan out accurate budgets and marketing campaigns with the help of an AI demand forecasting tool.
7. Digital Assistance
A great example of how artificial intelligent robots are enhancing in-store customer service is Lowe’s LoweBot. These bots make customers’ search easy by offering them detailed product information. Customers can communicate their needs to these robots with the help of touch or speech panels. It also allows brands to track their real-time inventory.
8. AI sentiment analysis:
Text classification and sentiment analysis are two of the most effective ways using which AI helps companies to understand users’ experience. Sentiment analysis allows companies to quantify customer feedback on the basis of their sentiments. Text classification allows to them identify the subject of those sentiments. That means with the help of artificial intelligence retailers can easily analyze data to get an insight into the product and customer experience. Using the results obtained, companies can improve their products and services according to the liking of the target audience.
There are a lot of AI has to offer for the retail sector. AI can extract useful insights from any data you provide it. These insights help you improve your products and services and deliver exactly what your target audience desire. Incorporate this technology to every aspect of your business and optimize your stock, improve inventory turnover and predict revenue opportunities the future beholds. AI will pave your way to success.