Using Artificial Intelligence in Retail to Transform the Customer Experience


Artificial intelligence (AI) can be transformative for every aspect of a retailer’s business. With AI, retailers can automate the supply chain, utilize data to drive sales and hyper-personalize the customer experience. While AI sounds futuristic, it’s closer than you might think. Juniper Research predicts retailers will spend $7.3 billion on AI by 2022, compared with the approximately $2 billion spent in 2018.

So, what is AI? Simply put, AI and the closely related concept, machine learning, are computer programs that dynamically learn to emulate human behavior and make autonomous decisions. This contrasts with conventional software that requires someone to think about all the possible things you might want to be implemented and then write programs or code for those tasks. Having systems that can continually learn and train themselves can make them much more powerful and adaptable to new or changing experiences.

The investments retailers are planning to make in AI technology will have many benefits, but one of the most crucial will be the positive impact on customer experience. AI can transform the way customers shop in both virtual and physical channels, offering ways to seamlessly shop through product testing, self-checkout, data collection and inventory management.

Here’s how AI can impact the ways merchants deliver personalized experiences to their customers:

Mobile Shopping Assistants

An interesting in-store deployment of AI was piloted by Macy’s and IBM – Macy’s On Call. The two companies piloted an in-store shopping assistant powered by IBM’s Watson. Once the customer accessed the bot via their mobile device they could then interact with the assistant as they would with a normal store associate. The more conversations the bot had, the smarter it became. It quickly learned how to deal with location-specific frequently asked questions, thus getting the customer what they needed as quickly as possible.

Ideally, the bot would recognize whether the customer’s language displayed signs of frustration or confusion and offer an immediate solution to mitigate the issue. What if the camera could detect signs of stress or anger on the customer’s face and alert a human employee to go help immediately? These are potential real-time intelligent reactions that ensure a positive customer experience is the primary focus.

Bots Driving Customer Service

Stores have also implemented physical robots for a variety of reasons: shelf-scanning, chatting with customers, giving directions, answering questions, warehouse deliveries or placing orders. The use cases for in-store robots only grows as AI becomes more advanced, and they bring more opportunities to change the way customers shop.

Can’t find a product? Ask the robot. Looking to order a meal? Tell the bot what you want. Want to know if more products are available in inventory? The bot has the answer.

Softbank, the creator of Pepper the AI robot, reported strong numbers in terms of increased revenue and foot traffic after a number of its pilots launched. Pepper can chat with or direct customers, and even accept secure payments. But her value isn’t just in her ability to aid the everyday shopper -- she can move around, dance and light up – even accept payments, creating a novelty experience that can draw in a passerby.

But with what the U.S. Department of Commerce estimates to be $513.61 billion dollars spent online every day, AI isn’t just about making in-store shopping great. There are plenty of ways to incorporate AI into your customer’s online shopping experience as well.

Bringing AI Online

A personalized shopping experience is a positive one, and many stores are using AI to bring that personal touch to online customers. Woodhouse Clothing, a men’s online fashion retailer, found that its shoppers were 44 percent more inclined to make a purchase once they introduced AI-based personalization technology.

Using AI, companies can harness user data such as past purchases or browsing history to make new recommendations to customers shopping online. This can cut down on the time it takes for a customer to find items that fit in with their personal style.

Intelligent Price Adjustments

Price setting is another application of AI in the retail industry. AI algorithms can provide retailers statistically-likely outcomes of various pricing strategies, so they can push the best promotional offer to increase sales and keep their customers happy. This is an area where this technology shines. That is, the collection and analysis of vast amounts of data– both internal and from competitor’s sites – to ensure the optimal pricing decision is made.

By way of examples, eBay uses AI-powered pricing and inventory algorithms to help sellers determine the most appropriate prices. Kroger, the US grocer, applies AI for price optimization as well. Real-time data analysis allows them to stay flexible and alter prices and promotions instantly based on shopper insights.

Bridging Virtual and Physical Sales Channels

The beauty of AI is that it isn’t limited to either the physical or online space - it caters to the omni-channel shopper. AI can connect across the digital and offline channels your store may have, providing your customers with a seamless experience from one touchpoint to the next.

Picture this: A customer is admiring her friend’s shoes. She snaps a picture and uploads it to a retail mobile app which uses image recognition AI to locate the product. The app then redirects the customer to the product on the store website and recommends a nearby location that carries them. The customer heads to that store to purchase a pair.

AI is a game-changer for retail customer experiences -- personalization across all sales channels has never been so easy. But these are just a few of the ways AI can help transform your retail customers’ experience. If you’re looking for more information on delivering a personalized experience using AI, drop us a line!

Chris Tyghe is Vice President of Strategic Development at Ingenico Group, Canada


Christopher Tyghe


Ingenico US

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