Applications of Artificial Intelligence in Retail industry
The inclusion of AI solutions in sectors such as retail is proving highly beneficial for consumers. They get a better user experience by accessing a service in which businesses try to give them what each customer needs and knowing the needs of each one.
In addition, with data and algorithms, companies in the sector can put themselves in the shoes of their consumers and always manage to offer them the products and/or services that best suit each profile. Also, with the development of production processes, investments are made to improve products and offer greater variety. In this way, consumers benefit from more refined and select products.
AI makes it possible for companies to be more adaptable to each of their consumers, a personalization that is so crucial in today’s customer demands. We review the applications of artificial intelligence in retail and give the keys to the sector’s future.
How Artificial Intelligence is reshaping retailing
In recent years, data science has experienced a boom thanks to the number of insights it provides, not only about customers but also about the processes themselves. Its use is not only about automating tasks or reducing costs through process efficiency.
The more traditional retail companies are undergoing a process of accelerating their digital transformation, as it has become the cornerstone on which the rest of the company’s operations are based. Moreover, due to the pandemic, this part has had to be accelerated and prioritized. It is the perfect time to understand processes better and help businesses improve through AI.
In general, large retailers can invest in developing newer solutions for their products. However, startups are also emerging that are born digitally and with a very data-driven approach, making it possible from minute 0 to implement AI algorithms that help the business in decision-making. This translates into more significant growth and better positioning among their customers, making up for some of their staff shortages by orientation and positioning towards the end customer.
There are many benefits of AI and its functionality as a catalyst and enabler of business activity. For example, if we talk about generating good margins. With the proper application, the profit multiplier can be exponential since the combination at different points can reduce costs and increase the company’s sales and production.
Benefits of Artificial Intelligence in the Retail industry
For all the reasons discussed above, AI can benefit the entire retail value chain, from materials procurement, processing, point of sale, and end-user purchase.
Some customers are clear about their needs and even know the metrics they need to improve and how to do so. However, the vast majority are still testing solutions to understand these technologies and trying to see where to get the most out of them. Therefore, some of the essential benefits of introducing artificial intelligence in the retail sector include:
Purchase prediction
It can be extrapolated to both consumers and companies when it comes to purchasing materials for the production of products.
Process optimization
It is related to manufacturing, to reduce costs and material consumption towards a more sustainable product. In addition to all logistical operations to bring the product closer to the end customer.
Leveraging digital channels to help customers on their journey
Whether to recommend the products that best suit your needs, answer questions, help solve problems, or provide personalized assistance.
Analysis of user purchase behavior
Information is obtained from different stores (physical or digital) to understand better how to position certain products or improve current ones.
A better understanding of customer and product lifetimes
Provides the opportunity to undertake different marketing initiatives to improve the perception of products or actions to incentivize the user based on their behavior.
Personalization and better positioning of products
Meeting customers’ needs by analyzing consumption habits and recommending the best option based on responsible use of AI.
Fraud prevention
By analyzing user purchases, making it more difficult to prevent fraud.
Artificial Intelligence in Retail. Examples
AI applications for the retail sector can be applied to all types of customers, from significant shopping malls, fashion, and textile e-commerce to large and small supermarket chains, among many others.
Smoother communication
One of the most widespread applications is improving the communication channel with customers during and after the purchase. In this way, information is made available efficiently and enhances customer service and difficulties. In this way, incident resolution time is shortened, and customer satisfaction is increased.
In fact, this use case benefits the customers and the staff themselves, as it can be used to classify incidents better and even suggest to the agents a possible satisfactory solution so that the expertise is shared among the staff.
Stock forecasting
Other applications applied to the retail sector are material provisioning and sales forecasting. Thanks to AI, retailers can make a better estimate of their product stock, ensuring that there is no excess or shortage of products physically in the store.
They are also looking at optimizing their operations, both to bring the product closer to the end customer and when making or buying the materials to make their products. This is reflected in improved resource efficiency, making their operation more sustainable, and improving cost-saving parts of their value chain.
Product personalization
Retailers that have recently entered the market emphasize personalization and digital marketing strategies. They manage to involve the customer both in offers and in the process of understanding what their needs are.
The goal is always to offer them the best variety of products, improve brand perception, and increase profit per purchase.
Artificial Intelligence Partner
Partners’ role is instrumental in helping retail companies evolve to the next level. They are in charge of providing the business with the platform to carry out the adoption of AI and, subsequently, helping them better understand their production processes and their customers’ day-to-day lives.
Technology partners play a fundamental role in developing and supporting the different areas. This is why it is so important to choose the right partner who can be versatile to understand each company’s needs and develop innovative applications that will completely transform the company.
At Plain Concepts, we launched, in collaboration with IDC, a report where you can see statistics and information on what are the main barriers that technology companies face when adopting or implementing AI solutions and what is the future of this technology. Soon, you will download it to learn more and take your business to the next level!
