When speaking of the retail industry, we have to consider the main goal of its companies: achieve profitability to stay competitive in the market. Certainly, this is becoming more and more difficult since customers have new and ever changing purchase habits and needs. But it doesn’t mean companies have to panic, they actually have a reliable and efficient ally by their side called Artificial Intelligence (AI). As you may already know, AI is a machine intelligence that, like humans, learns from data, trial and error. It simulates human intelligence having the capability of solving problems, giving and taking commands and advice, automating various tasks. AI is particularly helpful in the retail industry since it is the sector where it is more important to understand and anticipate customers’ needs, using all the available data to build a personalized offer.
But how exactly is AI transforming the retail industry? Here’s something interesting you may want to know about it.
THE GROWTH OF ARTIFICIAL INTELLIGENCE IN THE RETAIL SECTOR
According to the Consumer Technology Association, artificial intelligence has numerous advantages for the retail sector: cost savings, increased productivity, rapid resolution of business problems, rapid delivery of products and services, and increased innovation. All these aspects positively affect the behavioral experience of customers and product optimization. The report “Artificial intelligence in retail market – growth, trends, covid-19 impact, and Forecasts (2022 – 2027)“ argues that the use of artificial intelligence in the retail market should record an annual growth rate of 35% between 2021 and 2026. As a result of the COVID-19 pandemic, consumers see online channels as the main tools to purchase and many companies have decided to take advantage of AI potential to deliver a personalized experience and an interactive environment to end users.
According to an IBM study, the adoption of artificial intelligence in the retail sector should increase from 40% of current companies to more than 80% in just three years. Investments in key technologies used in AI are also growing, and by the end of 2022 the global retail market will spend $7.3 billion on artificial intelligence.
Let’s discover together what are the main benefits of using artificial intelligence in the retail industry.
PREDICTING THE MARKET DEMAND
Thanks to artificial intelligence, future customer and market demands can be predicted, meeting new consumer needs. How? Let’s think about all the customer data you can collect and their incredible value. Analyzing this data, it is possible to study consumer behavior and anticipate their future actions. The importance of this information is now known and, for all those who run an online business, AI can help them obtain information about how many users are accessing the website and their demographic data. How to leverage this? For example, use this data to make decisions about marketing strategies. But there’s more. Artificial intelligence also helps retailers in the physical world. In fact, thanks to some of its most sophisticated technologies, it is possible to discover which spots in the store attract customers attention the most, helping companies in placing the products in the most appropriate areas.
CUSTOMIZING THE OFFER
We know how consumers now expect personalized shopping experiences and retailers are facing this challenge with the help of artificial intelligence. AI uses machine learning algorithms to analyze user behaviors, measure their interests and understand their preferences: browser history, page clicks, social interactions, past purchases, display time of a web page, localization. In this scenario, AI can help retail companies provide product advice based on consumer behavior and a customized offer according to their needs.
IMPROVING THE CUSTOMER EXPERIENCE
As we mentioned, artificial intelligence can help businesses in many areas, from remote job improvement to information processing, to data management and analytics. One area in which AI technologies have a really important impact is the customer experience and to offer truly engaging and personalized experiences to its consumers it is necessary to involve all the business areas that revolve around CX.
Marketing: One of the marketing managers’ priorities is to simplify the customer journey and interact with customers so they can find their best offer in the company. Marketers can simplify the consumer shopping experience by building on the data collected and using AI to discover new engagement models and leverage innovative insights. There are two areas of marketing where artificial intelligence has the greatest impact: target selection and lead generation. AI, in fact, allows you to identify prospects based on their inclination to conversion. From a qualified leads point of view, artificial intelligence offers possibilities for interaction and further segmentation based on the interests, involvement and time taken to complete the purchase. The end result will have a positive impact on marketing ROI by increasing the quality of consumer relations.
Sales: with increasingly sophisticated and demanding consumers, companies must be able to offer products and services that meet their needs and are available on multiple platforms and channels, at the desired price. How does artificial intelligence help sales? Its technologies guide the sales process in all stages, from customer identification to customer acquisition and retention.
Customer Service: Ensuring the right balance between self-service and human interaction is what consumers want today and companies must be able to offer this “hybrid” experience. On the one hand we find chatbots that are based on artificial intelligence and allow companies to optimize costs as they respond quickly to the most common problems of users. But we can’t hide the fact that, from a care perspective, human interaction is still a very important aspect that people rely on to solve more complex problems.
SIMPLIFYING AND SPEEDING UP CATALOG MANAGEMENT
Organizing your inventory and keeping it tidy over time is a really relevant aspect for retailers. Thanks to artificial intelligence and the connection with certain activities you can have a complete view of stores, buyers and products. We know some examples of AI applied to inventory management. Have you ever heard of smart shelves? That’s right, these shelves can identify out-of-stock items or any price errors. In this way the staff is immediately alerted of insufficient stocks or items placed in the wrong place, simplifying the update of the inventory. Obviously this is not the only contribution of artificial intelligence in this area. The technologies applicable to the retail world are many and constantly evolving: sensors, cameras, localization systems and so on.
We saw that AI is actually revolutionizing the retail world and the way companies operate. Sure, it is for the better, since AI allows brands to reach a better position on the market and understand their customers in a deep way. In an era of change and transformation, especially a digital one, it’s time to implement these innovative technologies to make your business daily activities more efficient and overcome the competition. Not only the benefits of AI are various and of incredible value, but companies also have different tools available to implement it according to their needs. So, what are you waiting for? Be ready to pack and set off for this new world full of possibilities!
