Artificial intelligence has revolutionized many industries. The use cases of AI in retail sector is quite compelling. AI in retail sector has become a disruptive force with it being deemed as “weapon to achieve profitable growth”. AI empowers both backed and fronted of e-commerce business. It can help retail business to estimate demand forecasts to drive higher margins, can increase the efficiency of supply chain, give valuable insights for making smart business decisions. On the customer side AI can personalize customer’s shopping experience by providing personal recommendations, 24×7 chat bots etc. This article main focus is on how artificial intelligence enhances customer experience. According to market survey conducted by fortune business insights [1], the global market size of artificial intelligence in retail is expected to grow from 3.1 billion USD in 2019 to 23.2 billion USD by 2027, thus registering a compound annual growth rate of a whooping 29.6%. The market adoption of artificial intelligence in retail is expected to expedite due to ongoing COVID-19 pandemic. Well established retailers are trying every possible way to improve engagement of their customer increase brand royalty and customer retention. However certain factors are derailing their efforts. Factors such as lack of infrastructure, legacy code, or higher cost of implementation are limiting AI adoption in retail.
Market Analysis
As per a survey conducted by Capgemini, AI in retail could help save $340 billion annually by the year 2022. By automating several processes and operations and making them more efficient, AI in retail isn’t just a stepping stone – using it right could help you ‘leapfrog’ your competitors. AI has moved past being the buzzword for retailers to a tool for revolutionizing retail sector.
According to market survey conducted by fortune business insights [1], the global market size of artificial intelligence in retail is expected to grow from 3.1 billion USD in 2019 to 23.2 billion USD by 2027, thus registering a compound annual growth rate of a whooping 29.6%.
Retail organisations who have adopted artificial intelligence are already seeing a whooping 16 percent to 19 percent in customer engagement, business intelligentsia, competitiveness and innovation and ultimately profit margins. This is reported by a study conducted by Microsoft Asia and IDC Asia/Pacific released this week at the NRF show in New York. Microsoft’s experience center located in Singapore has AI-driven technology is driving in-store technology driven by Microsoft-accredited partners Hong Kong-based Tofugear and Singaporean startup Trakomatic. Another research by Future Ready Business conducted for Asia-Pacific’s Retail Sector, predicted a 37 to 44 percent increase in key business matrix for retail organizations who have started using artificial intelligence to their advantage.
However, many retail businesses still that “Artificial Intelligence” is just a “large hype” with no actual contributions to increase in profit margins. About 29 per cent of Asian Retailers do not believe in AI solutions for improving their businesses. Furthermore, 67 per cent of Asian retailers in the survey have not started implementing any AI solutions or are waiting for the technology “to mature” before incorporating it into their business strategy.
Many businesses are looking to democratize use of artificial intelligence and its benefits in retail sector by bringing it small medium sized business instead of just limiting its usage to big multi-national corporation.
How can Artificial Intelligence Improve Retail Sector?
Personalised online shopping
Artificial Intelligence can make shopping very personalized. In fact, it is the most sought after thing in the online retail industry. These can include personalised search results, personalised offers and personalised product recommendations. Another innovation in personalization of shopping experience is – personalized pages. For every user the landing page of a retail website can be served differently and according to their past view history, clicks, liked items, items in their carts and purchase history. Thus, in essence giving customers what they would like to buy on the first page itself. By tracking users past activities in the website, the artificial intelligence solutions can predict the taste of user: their likes and dislikes. All the data points generated from like purchase history, view history, clicks, products added to the wish list and cart etc. are given as data points to suitable algorithm for generating product recommendations which are essentially the products the users are most likely to buy.
Apart from showing different products for different users, the layout can also be customized in accordance with how users interacts with the online retailer’s site. To get even more insight on user’s likes and dislikes the retailers might ask users to login through social media platforms like Facebook, Instagram, Pinterest, etc. This way, retailer have more data points to understand the user in terms of user’s likes, comments, shares, status update from his profile. All this information can be fed to the advanced machine learning algorithms to know your customer better.
24×7 FAQ chat bots
Intelligent chat bots can answer many queries of customer’s this reduces customer’s waiting time to reach out to a customer care executive. Also these chat bots are available throughout the year, and at all hours of the day. Thus implementation of chat bots for online retailers makes answering queries convenient for both – customer care executives and customers. For customer care executives it can give them more time to deal with more complex queries. For customer, it can provide instant answers to smaller queries. Organizations report a reduction of up to 70 percent in call, chat and/or email inquiries after implementing a virtual assistant. They also report increased customer satisfaction and a 33 percent saving per voice engagement. Chat bots are definitely changing the way the companies interact with their customers. Integrating such FAQ chat bots to one’s website goes a long way in improving customer engagement and brand loyalty. Apart from providing faq related to orders, they can also provide personal recommendations according to customer’s taste. In fact, H&M’s chatbot on the messenger app Kik, allows users to make a choice from recommendations, filters and style preferences, set the fashion brand ahead of its competition way back in 2016.
Kiosk implementation
This solution can enhance customer experience in offline stores. Imagine that you have an image of a particular product like a dress, you can send the image via Bluetooth/ Wi-Fi and the kiosk pops up with the exact dress/similar dress present in the store. Also, it will guide you to the exact location of the dress in the store. This will lead to ultimate shopping experience leading customer’s to spend more in offline stores.
Virtual trial mirror
Stand in front of the mirror and you would be surprised to see the entire catalogue present in front of the big mirror. You can actually see a different product on yourself, change the background, the colour of the dress, take a selfie, match with the complementary products and see the entire look without actually wearing the dress. Also, you could change the background and see how will you look like in different lighting conditions.
Walk Out Shopping Experience
Just pickup the stuff you like, add it to cart and walk out without going to billing desk. This erases the need of long queues at billing counter. This kind of technology has been implemented by amazon by amazon in select stores as “Amazon Go”. More big retailers like walmart are looking forward to using AI to augment their offline store customer experience. Their Intelligent Retail Lab, is an inventory tracking solution which makes sure most in demand in that location are always in stock. This helps in reducing the number of customer returning disappointed and empty handed on not finding their desired products.
Flexibility Of Price Adjustments
In a very competitive and price sensitive market akin to retail, artificial intelligence can provide a dynamic pricing strategy which uses valuable information from customer’s. These applications help enterprises to analyze the efficacies of multiple pricing models before arriving at the optimal price for their products. Retailers can also adjust prices by seasonal trends, competitive products and consumer demand. If we consider the long-term revenue it can generate, it is surely an investment worth making.
Conclusion
Artificial Intelligence has the power to transform the way customer’s shop in both online and offline store. According Microsoft Asia’s regional lead for retail and consumer goods, Raj Raguneethan, “Every … business should become a technology company to really compete in the modern world”. The companies who would like to survive and thrive in this cloud landscape powered by data must adopt AI solutions to cater to their customer experience as well as ensure smooth functioning of back end offices.
Need help with Emotion recognition and detection software?
If you want to utilize Artificial intelligence for your retail business need help, advice, or developers, feel free to contact us at contact@quantiantech.com or on our LinkedIn page or visit our company website, www.quantiantech.com
References
[1] https://www.fortunebusinessinsights.com/artificial-intelligence-ai-in-retail-market-101968 [2] https://insideretail.asia/2020/01/15/ignoring-ai-in-retail-will-cost-market-share-and-sales-warns-expert/ [3] https://www.forbes.com/sites/forbestechcouncil/2020/08/21/seven-ways-artificial-intelligence-is-disrupting-the-retail-industry/?sh=11d6b16a56ae [4] https://yourstory.com/2017/01/impact-ai-retail-industry