Artificial Intelligence (AI) Use Cases for the Retail Industry
Overall spending on Artificial Intelligence (AI) systems is projected to reach $79.2 billion in 2022, which is more than double the amount spent in 2019.
Artificial Intelligence for retail can provide positive upside in the form of optimizing supply chain operations, enhancing demand forecasting abilities, and improving customer engagement. As a result, these organizations will be able to realize increased cost saving benefits, elevated productivity, and rising innovation. But these are just a few high-level outcomes. Let's take a deeper dive and highlight, specifically, how AI can improve business outcomes in these areas for retail businesses.
Artificial Intelligence improves the Supply Chain
This is an area of continuous improvement for retailers. It's the mechanism of how goods and services are delivered to customers and is the linchpin to any retail operation. One way adopting AI capabilities can improve this operation is by providing real-time status updates on inventory.
In grocery stores, AI has been leveraged to track and predict when perishable items like produce and meats are no longer fresh. In the same light, this technology can assist sales associates at a clothing store to restock recently purchased items and help avoid missed revenue opportunities.
In both cases, AI gives employees time back on the floor for more value-added activities such as helping customers with their purchase decision or adding creative touches to merchandise displays.
Some other AI supply chain use cases include:
- Fulfilment – Ensures online orders are always ready for in-store pickup & create a more seamless experience for customers to return online purchases at the store
- Sorting – Smarter sorting regarding unsold, damaged, or returned items can limit waste costs
- Improved Security – Automated threat intelligence for online payments and product returns
- Pricing – More adequate response to supply and demand fluctuations by connecting with optimized pricing models
- Understaffed – Provides capabilities for virtual assistants and virtual reality (VR) technology
AI for Retail enables Demand Forecasting
Another important area where AI can assist retail organizations deals with improving demand forecasting. This is a key differentiator for retailers. It allows management to better understand future trends by combining large historical datasets with current information as it relates to consumer behaviors. Those behaviors can include the average number of products bought during a specific period, item(s) preferences as well as reactions to sales events and loyalty program promotions.
The ability to harness real-time dataflows and real-time analysis make instantaneous decision making a reality. AI powered demand forecasting makes it more likely that retailers will have the right products on the shelves for the right customer at the right time.
Customer Benefits with Retail Artificial Intelligence
So far, we've spoken about how artificial intelligence can bolster a retailers supply chain operation and reporting capabilities for demand forecasting. But can AI applications be used to improve the shopping experience too? The answer is yes!
Artificial intelligence, coupled with machine learning (ML), can make the consumer journey more tailored by way of segmentation of the shopper's needs, making personalized recommendations at the time of purchase, and offering the most recent products and services. These AI powered shopping features will increase customer loyalty and satisfaction to the brand.
To take things a step further, what could be more engaging than having a personal shopper to assist you with your purchase. AI assistants, such as chatbots, automated purchase advisors, and virtual fitting rooms, have the bandwidth to remember customer behavior, compare the quality & price of a product, check availability, and form customized suggestions to help shoppers make data-driven decisions. These capabilities will undoubtedly enhance the customer journey whether shopping online or at brick-and-mortar stores.
In conclusion, incorporating AI applications into a retail organization is no longer a “project” that you'll get to in the coming years, it is an immediate necessity for longevity and a key differentiator from competitors.
It's also important to note that AI capabilities aren't just reserved for larger organizations. Efficient data strategies and calculated technology selections make it possible for small and medium sized enterprises to also utilize artificial intelligence to improve retail solutions and business strategy.
Our expertise can help executives that are still struggling to realize the measurable impact of AI by providing a roadmap to success through our proven methodology, our unrivaled experience in the retail industry, practical use cases, and proof of concepts (POC). Only then can we bridge the gap between AI hype and AI value. Contact us here for a no cost discovery session.
Written by Toby George
Co-Founder & Chief Executive Officer at Data Ideology
Toby George is the CEO and Co-Founder of Data Ideology with over 16 years of experience in developing and executing data management strategies, Business Intelligence methodologies, and complex analytic solutions.