Artificial Intelligence may sound like a sci-fi concept, but with savvy retailers already putting it to use, it’s set to revolutionise the shopping experience.
With an industry valued at USD $126 billion, and predicted to reach $3 trillion by 2024, Artifical Intelligence is tipped to be one of the biggest trends for retail in 2017.
Innovative retailers are taking advantage of technological advancements, using AI or ‘machine learning’ to deep dive into massive sets of data, and make decisions without human intervention. The technology is something bricks-and-mortar stores need to be on top of, but it is crucial that by implementing the technology, they then use the data to optimise the in-store experience.
Here, we look at some of the most innovative ways AI is improving retail for both the merchant and the customer.
What customers want
All internet users have what is known as a ‘digital footprint’, which includes information such as our shopping history, interests and social media profiles. AI technology can analyse these footprints to create more targeted, personalised shopping experiences. American outdoor company The North Face started piloting this sort of technology late last year, using a customized version of IBM’s Watson program on their website. Shoppers are greeted with a series of questions, and the information provided is collated to produce personalised product recommendations. The retailer found that shoppers who use the AI tool convert more often than those who do not, and three out of four customers say they would be happy to use the AI tool again.
Northface is using artificial intelligence to create a personalised shopper experience, which leads to higher conversions improved customer satisfaction levels.
When they need it
There are many variables that are outside human control, such as the weather. However, retailers with advanced AI algorithms can analyse this information to ensure the right product mix is in store at the right time. For example, a period of unexpected warm weather will lead to increased purchase of summer clothing and reduced purchase of winter clothing. Specialised algorithms can then ensure appropriate stock is in store at the right time. This then leads to increased sales and reduces discounts.
Some retailers are also using AI to analyse historical data such as foot traffic, and sales from specific time periods to ensure the right number of staff are on the shop floor at the right times, leading to high quality customer service, customer retention and increased sales.
The best in business
Leading retailers are now turning to AI to drill down into some of the most fundamental element of running their business, from where to open new stores, through to marketing campaign effectivity, and staff quotas. Smart algorithms take into account everything from local demographics, distance from competitors and nearby events to decide on the best location to open a new store. Some retailers are also using AI to analyse historical data such as foot traffic, and sales from specific time periods to ensure the right number of staff are on the shop floor at the right times, leading to high quality customer service, customer retention and increased sales.
AI gets personal
Many of us are interacting with examples of AI on a daily basis without even realising, in the form of chatbots, voice search and search engines. Forward thinking retailers are utilising AI to act as personal shopping assistants when consumers are researching online, and many have adapted to understand more conversational styles of language to cope with the increase in voice search. Online visibility during this phase is a must, and Store Discovery Optimisation (SDO) increases this, allowing searches to be carried out by both category and location, thus optimising the consumer experience. Used well, AI technology has the potential to synchronise in store and online selling efforts to create a seamless, omnichannel shopping experience.