Artificial Intelligence (AI) is making its way into the retail industry in a big way.
If you haven’t caught up with AI and all its capabilities, AI, at its core, focuses on making machines intelligent, or capable, of solving problems as well as people can. Today, AI is able to make machines learn from experience, adjust to new inputs, and perform human-like tasks. It quickly combines large sets of data with fast, iterative processing and detailed algorithms, which allow the program to learn automatically from patterns in the data.
But what does AI mean for retailers?
Mark Mathews, the National Retail Federation’s vice president of research development and industry analysis, said it best in a recent press release. “From reducing shipping costs and improving supply chain efficiency, to personalizing shopping experiences and helping workers acquire new skills, AI technologies allow retailers to compete in the 21st century economy and better serve their customers. This is what the future of retail looks like.”
The opportunity for AI in retail is vast and consistently growing. Based on one of IBM’s most recent studies, retail and consumer product representatives anticipate the retail industry plans on using AI in six major areas: supply chain planning, demand forecasting, customer intelligence, marketing, advertising and campaign management, store operations, and pricing and promotion.
The Benefits of AI
AI-equipped technology will soon be popping up everywhere in the retail environment, to the benefit of many professionals in the space. Here are just a few of the benefits AI will have for retail businesses:
According to a survey conducted in August 2018 by Capgemini, AI could save retailers as much as $340 billion annually by 2022. Specifically, it’s estimated that 80% of the savings would come from AI enabling more efficient processes for supply chains and returns. Predictive modeling uses AI to examine consumer trends and helps identify which products to stock. AI has also been shown to reduce forecasting errors by 20 to 50%.
Improve Customer Experience
Farfetch’s Store of the Future has demonstrated that AI technology can even impact a brick-and-mortar store experience. With 83% of goods predicted to be purchased in-store by 2022, AI can equip these businesses with the edge they need to compete against e-commerce sellers. In particular, the Store of the Future’s smart mirror technology allows shoppers to request different sizes, colors or items, which then can be stored in the company’s database to improve later shopping experiences. The more the customer shops with the brand, the more personalized and unique their experience will become.
Provide Detailed Insights
When provided with sales data, AI can discover patterns in customer buying preferences and learn more about what, when and how consumers buy a brand’s products. Based on this, AI can provide suggestions on what items to put next to each other in a store, what types of sales promotions to send to specific customer types, or even which product categories to retire.
If your business is determining whether or not to invest in AI, the answer is yes. Whether you’re a large corporation or small boutique, retail businesses can’t afford to miss out on AI’s many capabilities.
-By Amanda Peterson, Enlightened Digital