The retail industry is facing a disruptive period. Various changes in customers’ purchasing behavior and the emergence of new business models have forced retailers to seek new strategies to remain competitive. Artificial intelligence (AI) has been identified as a key technology for sustaining competitive advantage over future competitors. Companies that use AI can gain insight into customer needs, uncover hidden patterns in data, and make better decisions faster than their competition. This impacts operations as well as customer experience, which are two major areas where companies need to invest if they want to stay relevant in today’s market conditions.
Personalized Shopping Experiences
AI can help you deliver a more personalized shopping experience.
For example, AI can assist customers in finding what they want by recommending products based on their past purchases and preferences. It can also aid in discovering the best prices for those products by comparing prices across multiple websites and stores.
Moreover, AI can identify products that are similar to what customers are looking for but may be available at a lower cost than what you offer (or vice versa).
When it comes to finding the right size or color, AI plays a crucial role.
It can recognize if someone has previously bought an item from your store. Consequently, when they return with another request for something similar but different in size or color, AI can suggest options based on this information without requiring any human intervention.
To delve deeper into the impact and applications of AI in the retail industry, you can explore explained.
AI-Powered Virtual Shopping Assistants
Virtual shopping assistants are AI-powered chatbots that can converse with customers and provide them with personalized recommendations and other information. They’re a great way to enhance the customer experience, as they allow you to understand your customers’ needs better than ever before.
For example, let’s say you run a clothing store and have built an app for your website that allows people to browse through all the items in stock at their convenience.
Your virtual assistant could ask them if there was anything specific that they were looking for when they came onto the site, maybe something related to weather conditions or where they live, and then offer suggestions based on those answers (e.g., “we have these jackets available if it’s going to rain”).
Predictive Analytics for Inventory Management
Predictive analytics can help retailers make better inventory management decisions. This is especially true in the era of omnichannel retailing, where consumers have access to multiple channels and stores.
Predictive analytics can help retailers predict demand for a product, identify trends in customer behavior, and optimize inventory management by identifying gaps between supply and demand.
It can also be used to optimize staffing levels at various times of day or week based on historical data from previous years’ sales figures.
Dynamic Pricing Strategies
Dynamic pricing is an AI-enabled tool that allows retailers to set different prices based on the demand for a product.
For example, if you’re shopping for a Keurig coffee machine and only one model is available in your size, the store will charge more than they would if they had several styles of the same appliance in stock.
Dynamic pricing can be used to influence customer behavior as well, such as by offering discounts on items that are out-of-stock at nearby stores or when shoppers purchase multiple items at once.
In addition to improving customer experience by providing them with better deals on products they want (and maybe even buying more stuff), dynamic pricing strategies also benefit retailers by encouraging shoppers not only visit their brick-and-mortar locations but also make purchases online whereas before many customers might have been hesitant about buying from an unfamiliar brand without seeing it in person first.
Enhanced Supply Chain Management
AI can help with supply chain management by providing insights into inventory management, forecasting demand, order fulfillment and inventory optimization.
Supply chain management is one of the key areas where AI technologies can have a significant impact on retail operations.
The ability of retailers to manage their supply chain effectively is critical for outcomes such as improved customer experience through faster delivery or reduced waste by avoiding overstocking items that may not sell well in certain markets or seasons.
AI-Driven Customer Service
AI-driven customer service will be the next step in the evolution of retail.
AI can help with customer service by answering questions and providing recommendations, like a virtual assistant. It can also help solve problems for customers, such as identifying fraud or providing product suggestions based on their past purchases.
The final piece of AI-driven customer service is to provide a personal touch for example, if you’re having trouble finding something on your own website, it would be nice if an automated bot could ask if there’s anything else they could do for you while they search through all those pages looking for what they think might be helpful (and not annoying).
AI is a powerful tool that can be used to enhance customer experience and operational efficiency.
The impact of AI on retail will be felt across every aspect of the industry, from shopping experiences to supply chain management.
The adoption of AI will also lead to dramatic changes in how people work and live their lives.