4 Ways AI Will Impact Retail

artist's rendition of an AI-created face

You’ve probably heard the old adage, “Actions speak louder than words.” While it’s easy to apply this to people, have you ever applied that same thinking to companies?

Sure, a customer still connects with a store’s branding, but it’s really the customer journey that impacts perception and loyalty. The customers’ shared experiences are now defining the brand’s story. This understanding has retailers racing to figure out how they can enhance the relationship with their customers, regardless of channel.

This is where Artificial Intelligence (AI) comes in. AI gives digital systems the ability to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.

These smart data systems collectively become more insightful in their ability to drive merchandising, marketing and service decisions, which ultimately impact the relationship between retailers and consumers. This evolution in smart service is what will eventually separate the leaders from the pack.

The shift is being felt by just about every major retailer. Juniper Research predicts that AI spending will increase fourfold to $7.3 billion by 2022. With this type of spending, consumers will notice big changes in retail stores.

    When e-commerce exploded, many believed that brick-and-mortar stores would become irrelevant, but this is simply not occurring. Instead, retailers have increasing pressure to evolve the roles of their physical stores to meet the needs of their customers.Consumers have complex purchasing habits. While they’re open to buying some things online, like books, music, video games and household products, they still prefer to see clothing and furniture before they buy.Understanding the purchase funnel and its touchpoints across categories is essential to a solid channel strategy. Physical stores need to embrace a more custom feel, the way online shopping does, focusing on faster, more personalized and more intuitive experiences. They need to focus on balancing the disadvantages of online through fast order pickups, easy returns and mobile integrations such as shopping assistants and one-click checkout, like the new Amazon Go model.On the other hand, retailers need to dial up service to make online interactions feel more personalized and responsive through personalized webpages and AI-driven chatbots to help problem solve, recommend products and guide purchases. Deepening the personalized service online will alleviate some of the pressure in stores.
    Personalization is often misused – or overused. With the rise of AI technologies in stores along with the increase of wearables, personalization will take on a whole new meaning. With improved segmentations and predictive analysis, retailers will understand your shopping preferences and needs as well as how outside factors – such as current weather, events and trends – impact them.Picture a time when you enter a store and you’re immediately recognized by your smartphone or smartwatch. As you walk through the store, you will notice that displays change as you come closer, offering product recommendations or even alternatives offered only on the store’s website. Through the sequencing of product displays, the smart system will help you optimize your path across the store.The AI system will also continue the dynamic personalization after you leave the store. Whether it’s timely texts or emails, the follow-up to the shopping experience becomes more relevant via retargeting products you considered but did not purchase, cross sell of products in your favorite categories or relevant recommendations for future online purchases or shopping trips.
    Probably the most anticipated impact AI will have on retailers is when augmented reality and mixed-reality platforms are unveiled. We’re on the cusp of a breakthrough, and these heightened experiences will allow for contextual data to be layered with real-life moments to improved how customers visualize products and services.For example, one of the hard parts of shopping for furniture is the worry that it won’t look right once it’s in your home. A mixed-reality furniture-shopping experience allows customers to not only select their furniture, but also to ”place” it in their rooms to see how it looks. To improve on the experience even more, an AI overlay allows the system to offer products such as paint, window treatments or other accessories to complement the room.
    There’s a great opportunity to become a better retailer in this new era. By using a deeper understanding of the customer, stores can leverage technology to elevate the shopping experience and eliminate common in-store shopping frustrations.For instance, most of us can relate to finding a shirt that you must have, but discovering the store is out of your color or size. Instead of walking away, you now can load your store’s personal mobile assistant to help you either find the shirt at a store nearby, or trigger an online purchase of the item that’s delivered right to your door. The service becomes remarkably better when the same assistant offers you similar-fitting shirts based on your body type, complementary pants or matching shoes that are all your style.

It’s an exciting time to be a consumer. The race to the finish is on while companies are figuring out how quickly they can enhance their data systems to make them real-time and actionable. Retailers will have to make targeted decisions about where to invest first, to optimally connect with customers.