AI in retail – How artificial intelligence is improving the retail shopping experiences

Sudeep Srivastava February 10, 2022
AI in retail

In the heart of Seattle lies a one-of-a-kind disruptive retail store – Amazon Go, a retail concept that gained popularity after opening its first Beta store earlier in the year 2018.

For those who are new to the world of Amazon Go, it is a grab-and-go retail model and one of the perfect examples of AI in retail, where all you have to do is download the app, take up an item from the shelf, and leave the shop. The items automatically get added to your cart and the amount is debited from your Amazon account.

The concept with which Amazon Go is launched is something that the retail world has never seen. With artificial intelligence at its center tracking what items users are buying and the amount that has to be charged from them, Amazon Go is undoubtedly revolutionizing the shopping experience for consumers.

The popularity that Amazon Go Retail has been able to achieve in just a few years of its official launch, has led to a number of other retail stores investing in deep learning and artificial intelligence technologies. Walmart and Microsoft are also apparently planning to level the cashier-less retail outlet space which is presently only dominated by Amazon.

The AI-powered Amazon Go venturing into traditional retail plans has proved itself to be a hit in the market. The brand is now hoping to expand its business to over 300 stores and make itself one of the major AI technology trends that the retail houses will be looking at in 2022 and beyond. But AI’s capability as the medium to bring retail industry transformation is not restricted to just one disruptive use case that Amazon Go retail is.
There are a number of other ways retail AI is changing the industry’s outlook. In this article, we are going to dive into the role of AI in the retail industry along with some real-world use cases.

AI in retail – Market overview

AI in retail - Market overview

Now that we have looked into the role of AI in the future retail industry, let us move on to why the need of AI even arises in the retail domain. 

What are the benefits of AI in retail?

The integration of AI and machine learning solutions has increased speed, efficiency, and accuracy across every branch of retail business. These AI solutions in supply chain, retail and other similar sectors have empowered businesses with high-level data and information that is leveraged into improved retail operations and new business opportunities.

So, while there are countless benefits of AI in retail, here are four primary ones that retailers can count on.

Captivate more customers: Using artificial intelligence retail solutions, retailers can provide smooth customer support in different scenarios – starting from automated checkouts to customer mood tracking. Retail AI also provides customers with personalized and immersive shopping experiences. This ultimately leads to more customers and an enhanced customer experience.

Create exciting experiences: To drive continued interest, retailers need to differentiate their products and offer compelling services and experiences to consumers. By integrating predictive analytics to gather more market insight, retailers can lead with innovation rather than react to change.

Effective promotion and merchandising: Artificial intelligence retail solutions drive marketing and merchandise planning, helping segment customers, generate content, and plan and execute targeted advertising programs. For example, Walmart is already using AI to scan competitors’ offerings, and, in the near future, it hopes to use robotics to scan its own shelves to optimize its product mix.

Enhance operational efficiency: While routine tasks are automated, AI also supports and enhances increasingly demanding work. AI in for retail helps optimize labor scheduling, delivery tracking, and route planning for deliveries, among other tasks.

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Ways AI is disrupting the retail industry

With thousands of traditional retail stores announcing their plan to close down their operation after not being able to deliver the same output as online retail stores, the brick-and-mortar retail world as we know is facing a ‘Retail Apocalypse’.
Seeing the horror that now stands to face the future of retail, a number of retail giants have started applying the power of artificial intelligence in the retail market to keep them afloat.

Let us look into a few areas where the combination of retail and AI is marking a strong appearance.

areas where the combination of retail and AI is marking a strong appearance

1. Streamlining supply chain and logistics

One of the major elements of the mere concept of a factory of the future is made of a smart, connected, and very efficient supply chain. The fact that there are a vast number of stakeholders participating in the supply chain cycle — manufacturers, suppliers, retailers, distributors, and the customers — the supply chain itself presents a number of opportunities for introducing automation in the business process, something that the supply chain focused AI solutions for retail is known to handle effortlessly.

AI-enabled supply chain and logistics management can help companies predict and then react to the changes in demand, amount of available inventory, the environmental condition, supplier capabilities, environment condition, and even the customer needs,. This ultimately ensures better productivity, timely product and service delivery and increased revenue.

According to a study by Capgemini, applying AI to the supply chain could save retailers $340 billion in operational expenses.
Here are a few ways AI in supply chain and logistics is revolutionizing retail:

  • Improving the accuracy of demand forecasting
  • Lowering the operations and inventory costs along with providing faster response times to the customers.
  • Forecasting the demand for new products
  • Improving the factory scheduling and production planning accuracy by accounting for various constraints and then optimizing the supply chain for each
  • Reducing freight costs, improvement in the supplier delivery performance, and finally, a minimization of the supplier risk.

2. Understand your customers

AI and machine learning in retail gives retailers a complete idea of who their customers are. Upon studying the multiple customer data and reviews, it gives businesses an idea of what their customers want and what is keeping them away from making repeat purchases.
The insights drawn this way lay the future of AI impact on businesses and how it can be your way to get direct insights into your existing and prospective customers. The information can further be used for running targeted marketing campaigns, which are known to improve the customer retention numbers across several retail houses.

3. Offering customized experience

Answering the shoppers’ unique requirements is one of the most foolproof ways to grow and maintain the customer loyalty count. Something conveniently possible through the blend of artificial intelligence and customer experience.
In a survey, 70% of respondents revealed how they would be a lot more loyal to the brands that added features of personalization in their outlets. With transactional data, AI, and machine learning in retail, brands can easily track and then analyze past purchases, customer behavior, and loyalty cards to deliver more customized offerings.
A perfect example of customer-oriented AI in retail is Sephora’s Color IQ. It is the brand’s AI-driven in-store offering that scans the skin surface and recommends makeup products on the basis of the skin color.

4. Lowering out of stock instances and markdowns

Using AI solutions in retail stores, the seller can get direct insights into the sales pattern in the stores and lower the safety stock usage. The extent of how AI is revolutionizing the retail industry can be seen in how handy it comes while allocating or replenishing the inventory as retailers will no longer have to be dependent on seasonal markdowns.
For instance, H&M utilizes big data and AI for analyzing the store returns and receipts for the evaluation of purchase per location and then stocks the inventories on the basis of these insights.
Employing AI solutions in retail for the purpose of analyzing the inventory will help lower instances where stores order bulk items of products that are not in demand, which ultimately gets wasted and have to be returned – bringing an unnecessary hike in the purchase and shipping cost.

5. MAP analysis

The Minimum Advertised Price (MAP) is the lowest price that any retailer can quote for the sale of a product. The products that are sold at a rate lower than MAP can adversely affect business for the retailers. Thus, it is necessary to track sellers who play around with the MAP price. Using retail artificial intelligence, brands can prevent violation of their MAP pricing by tracking and monitoring products in real-time.

6. Revolutionizing the in-store customer experience

By integrating smart mirror technology in the store, clothing brands can help visitors check how the piece of clothing is looking on them. All they have to do is hold the piece of garment in front of their body.
The mirror technology – one of the most popular uses of AI in the retail industry – can be made more advanced and user-friendly by giving visitors more options to wear with their selected piece of clothing along with the cost of each item.
AI can also replace sales personnel to assist customers in the store, reduce queues through cashier-less payment, and replenish stock by real-time stock monitoring.

7. Detecting non-scans

Retailers, on a yearly basis, lose out around $45 billion in the name of non-scans and shrinkage. The catastrophic checkout problem can easily be solved with AI. By using computer visions and AI algorithms, retailers can analyze the video feed and detect the instance where the product is left unscanned and inform the checkout staff in real-time. These technologies also help identify scams and mistakes at the time of checkout.

8. Smart product searches

Artificial intelligence in the retail market can likewise simplify product searches for customers. Customers can now take a photo of an item or product they like in reality and afterward utilize the image to search for a retailer selling it on the web. Here machine learning classifies a large number of things from different merchants and sorts them for the customers within seconds, making item search and comparison simpler than ever.

9. Behavior analytics and forecasting

AI technology is believed to be vital for retail businesses. Utilizing this innovation can assist retailers with sorting out the customer’s requests and needs, which will make them more customer-centric.
With the assistance of information procured through AI-driven analytics, retailers can make well-informed business choices about the amount of stock to be ordered based on the customers’ conduct. It won’t just build productivity but additionally save time and money for the organization.
Utilizing AI calculations, retail organizations can run focused marketing and advertising campaigns based on customers’ locale, inclinations, gender, and buying habits. It will help in improving customer loyalty and retention as a customized experience is an incredible method to show them that you care.

10. Streamlining store operations

Multichannel retail has made store operations complex. Store associates have to play multiple roles in a warehouse. Their job is no longer restricted to receiving goods, stocking them, and managing inventories. They also need to provide product information, keep track of promotional offers and handle merchandising. AI in retail can streamline the work of a store manager by automating back-office activities and using robotics for quality checks. The time saved can be effectively utilized for other productive work, thereby saving a lot of time in the warehouse.

Now that we have looked at the different ways AI can be incorporated in your brick-and-mortar retail space, let’s look at some of the real-world examples of AI in the retail industry.

[Also Read: The Complete Guide to Amazing Features of Retail Business Apps]

Use cases in retail: How major retailers are using AI?

Let’s face it – retailers using artificial intelligence have a competitive advantage. A few big brands have already started leveraging AI in their business operations to improve efficiency and offer an enhanced shopping experience to users.
Here are a few big companies that are using AI to improve the overall retail experience and increase sales.

How major retailers are using AI

  1. Lowe’s helping robot: Lowe’s introduced its Lowebot back in 2016. It is one of the best AI in retail examples. Lowebot is a customer assistant that speaks several languages and knows the product location better than anyone else. It also monitors the store’s inventory in real-time and signals if products should be restocked.
  2. Domino’s robotic unit: Integrated with artificial intelligence technology used for military combat training, the DRU sensors help Domino’s in the navigation of the best path for delivery of pizza. Seeing the amount of investment that Domino’s is making behind the technology, the future when delivery persons will be replaced by robots is not very far.
  3.  Amazon’s drone
    Coined as Amazon Prime Air, drones are a major futuristic part of Amazon’s delivery system. While the launch date is not announced yet, the future where the items we buy are delivered to our homes through drones is not very far. A future that will set a benchmark for AI use cases in retail.
  4. Walmart’s virtual trial room:
    Trusted by Walmart, Zeekit uses AI technology to dress anyone virtually in any item of clothing found online. Zeekit’s introduction of interactive fitting rooms to millions of shoppers may expedite the technology’s availability across the retail landscape.
  5. Neiman Marcus’s visual search:
    The luxury department store makes use of AI for making it convenient for their customers to search for items. App users can take pictures of items they see when outside the store and then search the Neiman Marcus inventory to get the item. In place of using unclear search terms to search for an item, the photos help them find similar items.
    While its integration is comparatively a lot easier in the case of mobile retail or mCommerce apps, integration of the disruptive technology in stores would call for a major overhaul of your business model and would only deem to be useful when the integration that you have made is technically advanced – something that can only be achieved when you have partnered with an equally sound AI software development company who understand the technology to its core.

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How can Appinventiv help in your AI retail journey?

The advantages of utilizing artificial intelligence in the retail market are endless. From offering clear insights into new trends to improving customer experiences, the implementation of AI can enhance your business’s proficiency.

At Appinventiv, our highly-experienced team of professionals will help you implement intelligent AI-driven solutions for your retail business while taking care of all your challenges at the same time. Learn more about how Appinventiv is helping retailers in adding value to their business.
So, in case you are looking for top-notch artificial intelligence services, you can consult and hire our experts. We will have all your needs covered!

FAQs About the Digital Transformation of the Retail Industry with AI

Q. How is AI changing the retail industry?

A. AI, in its many forms and facets, is changing many industries. As for the retail industry, it is making it a lot more predictive, forecasting, and preventative. It is helping businesses understand their customers better, estimate the item requirements, map the price they should be sold at, etc.

Q. What’s the future of AI in retail?
A. The future of AI in retail, which is estimated to be worth $5,034 million, is likely going to see itself getting combined with other disruptive technologies like AR/VR, Blockchain, etc. with the aim to make the retail store smart and future driven.

Q. Does AI improve retail and help increase sales?
A. Yes. AI in retail gives a complete insight into customers – their purchase preferences, what irks them, etc. It also gives them information about the stocks, which they should reorder or stop ordering for a while, among other such insights which are directed at their long-term sales and profit-generating capability.

Q. What are the benefits of AI in retail?
A. Some of the benefits of AI in retail are enhancing consumer satisfaction, streamlining the supply chain, creating new experiences for users, detecting non-scans, and more.

Sudeep Srivastava
Sudeep Srivastava
Co-Founder and Director
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