Digital Transformation: The Impact of AI on the Retail Industry
Technology industry research and advisory company, Gartner, has projected that by 2021, almost half of new enterprise applications will include Artificial Intelligence (AI) technologies. AI may not be in widespread use just yet but will have far reaching applications across applications due to significant decision making capabilities as well as facilitating insight from data sets. AI in the enterprise also promises upgraded automation and streamlined processes to support a more engaged workforce and customer engagement.
The AI promise for retail
The radical improvements in technology for performance improvements over the past few years has prompted businesses in most industries to examine their current business models to strategize digital innovations that will disrupt and elevate their current operations.
The retail industry, in particular, is zeroing in on customer engagement with investments in technologies such as AI and chatbots. The goal has always been customer satisfaction but retailers are especially interested in personalization initiatives that move them ever closer to customer delight. The adoption of digitalization will help retailers cut costs and operate more efficiently in areas such as inventory, training, pricing and customer engagement.
Retailers are ready to spend on AI
For the first time, retail will outspend the banking industry in 2018 when it comes to AI spending. Retail companies are expected to invest $3.4 billion this year on AI technologies like automated customer service agents, shopping advisors and omni channel merchandising.
By 2022, retail spending on AI will more than double to $7.3 billion per year according to a study conducted by Juniper Research.
According to a study conducted with retailers by SLI Systems, the most popular applications will comprise personalized product recommendations (56%), customer service request apps (41%) and chatbots (35%).
AI in real world retail
Customer delight is the overarching goal for any retailer because of the long-term revenue potential and influencer power inherent in a customer. Transaction-based interactions have been pushed aside in favor of personalized engagements that create strong bonds. But what’s necessary for retailers to get to this level of delighted nirvana?
“Platforms with a digital core play a central role, but well-thought-out [digital transformation] use cases will enable organizations to focus on executing against their customer experience objectives in stepwise fashion, staying agile and adjusting on the fly to continue to serve the customer in their stream of life, above all,” Leslie Hand, vice president of IDC Retail Insights, said in a statement.
“Attention to consumer need, customer journey patterns, and the ability to maintain customer loyalty by engaging the consumer continually in their context is the key to success,” Hand stated.
AI makes shopping fun again
The potential for innovative AI applications is strong for all major industries, but will be especially fun in the retail space. AI will not only simplify shopping experiences, it will make each encounter more personalized, moving customers quickly from consideration to purchase. Other AI-inspired features that will improve the shopping experience include:
- Chatbots that inject personality into online experiences. Chatbots are great tools for real-time customer interactions to help solve problems, answer questions and even locate specific products. Chatbots have their own charms and, even better, they don’t get tired of answering the same questions time and time again like their human counterparts.
- Gesture recognition creates the ultimate shopping excursion. User recommendation is used in many applications today to enhance customer experiences but it’s about to raise the fun quotient considerably. AI-driven in-store gesture walls capture and interpret customer movements as commands. Product selections can be narrowed down quickly, leading to faster sales. Brands can also capitalize on the inherent insight into customer behavior and adapt accordingly.
- In-store robots interact with customers. Chatbots aren’t the only AI tools to have fun with retail customers. In-store robots have moved out of the warehouse and out into shopping aisles to answer questions and even locate products.
- Virtual mirrors speed the shopping process. Spending hours trying on clothes and accessories can put a damper on a shopping experience because of the trial-and-error routine involved. AI-powered virtual mirrors allow shoppers to visualize what they would look like in certain garments based on an actual sized mirror overlay of the customer. Outfits can be changed quickly using a touch screen interface, speeding up the shopping experience with the possibility of bigger sales due to the innovative process. Brands will also gain invaluable insight into customer demographics, shopping trends and more.
AI can also do for physical stores what analytics do for online retail shopping in terms of gauging customer behavior. Security can also be ramped up with AI applications that can provide real-time video surveillance to protect customers and employees against any potential threats.
AI is no longer the stuff of science fiction—it’s here and it’s necessary for any retail business serious about growth stemming from long-term customer satisfaction. Major retail brands as well as smaller businesses can benefit from AI applications as part of the digital transformation strategy.