AI in retail:
transforming
the customer
experience

Over the last decade, shopping has become increasingly technology-enabled. But it's not just mobile apps, digital shopping carts and one-click checkout. Brands are harnessing technologies including artificial intelligence (AI) in innovative ways to understand consumers' preferences, predict their behavior and deliver personalized offers in near real-time.

The future of AI in retail looks promising and may just transform the relationship between brands and consumers. The technology has several benefits for retailers, including helping them to increase their margins, improve operational efficiency and optimize both the customer and employee experience.

Here's a closer look at some of the most exciting opportunities for AI and retail.

AI allows machines to execute tasks that humans traditionally perform. Combined with 5G networks, AI could enable companies to access the data they need quickly and securely from various operational systems to make more informed business decisions. The technology is such a powerful tool in the retail space because it allows companies to process massive amounts of data efficiently to uncover patterns or trends within their business, and automate key business processes.

Customer service is one example. AI can power chatbots, virtual assistants and virtual call centers. Companies can apply AI and natural language processing—which allows machines to understand and interpret human communication—to automate the work of call center agents. AI-driven chatbots and virtual assistants can answer routine customer questions or direct customers to more information on a retailer's website. In virtual call centers, AI could allow companies to better manage call flow, route calls to the appropriate destination more quickly, and even process, transfer and analyze data for speech analytics and sentiment analysis that agents can use to respond more effectively to customers' issues (and emotions) in real time.

Many retailers have been forced to scale back their workforce over the last year and rapidly digitize their operations as shopping shifted from brick-and-mortar stores to online. AI in retail acts as a workforce multiplier, allowing these companies to be more nimble, efficient and responsive to customers' needs.

Supply chain management is an ongoing challenge for retailers. When supply chain issues occur, they affect product availability and a company's ability to give consumers what they want when they want it. AI in retail helps to resolve many of these challenges by quickly analyzing massive volumes of data to identify issues and predict trends - enabling retailers to make smarter decisions and be more proactive than reactive.

For example, AI can help retailers with inventory management by predicting when supply could be low so store employees can restock or reorder items more quickly, as well as predicting when some items may need to be marked down because they are not selling fast enough. The technology can also help retailers with forecasting and planning, providing them with access to insights about monthly, seasonal and annual buying trends in their business. A home improvement retailer may be able to see purchases of lawnmowers ramp up in January, for instance, so the company may decide to increase inventory during this time and launch several marketing promotions to boost sales.

Digital twins, or digital versions of real-world products, are another AI-powered technology. Using sensors enabled by the Internet of Things (IoT) in physical stores, retailers are able to gather data about real-world customer interactions. A digital twin can then simulate this behavior or scenario in a virtual environment and provide insights that allow retailers to improve forecasting, demand planning, store operations and customer service. Digital twins can serve retailers in several ways, including helping them reconfigure their store layout to meet social distancing requirements, experiment with different fulfillment models such as curbside pickup to get goods to customers safely and more conveniently, or test the positioning of promotional displays and in-store signage to understand what approach is most effective for converting customers.

All of these applications of AI in retail can lead to greater customer engagement, satisfaction and sales.

Imagine being able to walk into a store, put items in your cart, and check out without handing your card to a store clerk or scanning products in a self-checkout line.

At Amazon Go stores, for example, customers can place items in their shopping cart and simply walk out. This is only possible because of sensors placed throughout the store that transmit information to customers' Amazon Go app about the items they've placed in their cart. Customers' credit or debit card information is stored in the app, so when they walk out Amazon automatically charges their card. AI in retail allows Amazon to transfer all this data securely in near real-time between these connected devices so the customer gets a seamless shopping experience—with no checkout required.

AI also can enhance security for credit card transactions, allowing credit card companies to process data in real-time and quickly detect potential fraud when customers input, tap or swipe their card. It can recognize patterns in user behavior, which is why a consumer might get a fraud alert when their bank suspects an unauthorized person is using their card.

When it comes to AI and retail, cutting-edge tech also helps retailers gather and analyze behavioral data in real-time to deliver targeted offers to customers in-store and online.

Retailers can use the technology to make each customer's website experience more personalized, including presenting a customized homepage with product recommendations based on the customer's past behavior on their website. AI can also make digital signage more engaging. For example, AI-driven algorithms can analyze data about current weather conditions and connect this to a store's available inventory to populate digital displays with relevant products customers may need at that exact moment—whether it's rain boots in April or charcoal and other grilling equipment during the summer months.