February 10, 2023
There was once a time when the retail experience consisted mostly of consumers going to a store and picking out something that they need or like. The process has slowly evolved over the years, thanks largely to technology, and now, artificial intelligence in retail.
AI in Retail: 5 Top Benefits
Research shows that the AI retail market is poised to surge from USD 3.75 billion in 2020 to over USD 31 billion by 2028. The strong growth is nothing short of remarkable — and for good reason. Here are five of the key benefits of utilizing AI in the retail industry:
1. Enhanced and Personalized Customer Experience. Whether the customer is shopping in-store or online, in a specialized boutique or a large shopping mall, the goal is to make his/her experience personalized and hassle-free. AI algorithms help achieve this in many ways. For example, robots are physically deployed and AI chatbots can be opened to guide shoppers in finding the items they are looking for in big stores.
When buying online, AI systems are in place as well to keep the experience as convenient and enjoyable as possible. Most online shops, for instance, keep a record of the customer’s preferences and present products and styles based on their previous shopping history. Apps are also available to help customers envision how the product would look on them — e.g., clothes, make-up, jewelry — before they make their final purchase decision.
2. Optimized Supply Chain. AI retail algorithms are improving logistics and supply chain efficiencies across business organizations. Deliveries can be done more quickly and cost-effectively when drivers are provided clear information on optimized routes. One company, for instance, is using computer vision and product recognition software to map out the shortest and most efficient route of collecting items within the warehouse.
The use of robots in inventory and packing is also crucial in keeping the supply chain moving and ensuring that products are ready for delivery on time. This also relieves employees of packing duties and frees them up for more important tasks such as attending to customers.
3. Accurate Demand Forecasting and Merchandising. Artificial intelligence retail solutions are helping businesses understand customer behaviors and trends, which in turn, allows them to predict demand more accurately. Proper analysis of transactional and customer data leads to informed decision making on product availability, pricing, markdowns based on season and weather conditions, product placement, and other factors.
Heat mapping in stores is one utilization of AI in the retail industry. Deploying cameras with computer vision applications can show which products are most picked up and which are most returned. It can also reveal where customers often proceed after getting a certain product. When customers can find and check out products easily, they are most likely to shop again.
4. Cost Savings. Enterprises can enjoy significant cost savings with the use of AI retailer systems. One way is by introducing self-checkout counters and automated kiosks which can reduce the need for human cashiers. Fewer customer service representatives are also required when chatbots are deployed to initially handle client queries and concerns.
AI in retail also promotes savings by helping organizations save on unnecessary advertising and marketing efforts. What it does is give you precise business insights so that ads are targeted to the right market and demographic.
5. Improved Security. Data is the currency of any business organization, and keeping this data as secure as possible is therefore, always a top priority. The retail industry uses a lot of data — personal information, credit card data, sales information, etc., and the consequences could be dire if any of this data were to fall into the wrong hands.
Artificial intelligence in retail does not only offer solutions to properly leverage the data, but to protect that data as well. There are AI algorithms designed to detect instances of unusual data movement in real time, and send out alerts for these. Other than data protection, AI retailer systems are also utilized for physical security where computer vision cameras detect suspicious activity and alert security for proper intervention if necessary.
It’s clear that artificial intelligence retail solutions are paving the way for improved profitability and efficiency, while providing more opportunities to enhance the customer experience. And with the technology rife with potential, the benefits discussed above are just the tip of the iceberg of the impact of AI in the retail industry.