Artificial Intelligence in the Retail Business: Technologies and Use Cases
During the pandemic crisis, retailers need deep insights, allowing them to compete and grow their loyal audience. The best way to get it is to deploy artificial intelligence (AI) and machine learning (ML). And it’s not just a random opinion.
The market of artificial intelligence in the retail industry will be growing with a 35% CAGR up to 2027 (according to Market Study Report). Valued at 1.80 billion USD in 2020, the market is expected to reach 14.71 billion USD in 2027. What a breakthrough, right? There must be reasons for that.
Right now, we’re shedding light on the whole issue. What AI technologies are retailers using at the moment? What benefits are they getting? Keep on reading to get the answers to these questions.
AI and Retail: How Artificial Intelligence Impacts the Retail Industry
It’s no secret that 2020 was a crisis and even catastrophic year for many industries, including retail. For this domain, the AI niche fell by 30% compared to 2019.
Since harsh times require an innovative vision, retailers have started investing in artificial intelligence again. According to CB Insights, the niche has already hit a new record in 2021: 1.998 billion USD this year, compared to 1.711 billion USD in 2019 (a pre-crisis period).
Why Does Your Retail Business Need AI Optimization?
The numbers look impressive, but how about details on the real business benefits of artificial intelligence in retail?
First, let’s take a look at how retail businesses are using AI worldwide:
Let’s go into detail now.
1. Routine operations become more effective
Routine tasks go first because any retailer faces them daily:
- A supply chain can be optimized with AI algorithms. They make suggestions on the best plan to use, eliminating the human factor.
- Picking and packing are now supplied by robotic power. Moreover, robots can collaborate and pack bigger orders together.
- The number of product returns can be reduced due to the early analysis of future purchase trends.
2. The loyal audience is growing
Nowadays, AI can help retail provide smooth customer support in different scenarios: starting from automated checkouts and up to customer mood tracking.
3. Personalized approach reaches the next level
If a retailer has a website (which is most common now), AI algorithms will gather important customer statistics using email marketing and personal accounts.
4. The in-store space is used in an optimal way
Algorithms consider existing consumer preferences, product location, season and weather conditions, expiring dates, etc. to place shelves and products where visitors expect to find them intuitively.
5. Data security efforts become more accurate
AI technology is the earliest to identify atypical data movements in the system, and no human administrator can do it faster.
Technologies Used for AI in the Retail Industry
In 2021, AI for retail has many a variety of applications, and we want to provide an overview of the specific technologies used by online and offline stores.
1. Automated checkouts
The core of this innovation is computer vision built in the store’s cameras and set up in several spots around the space. The system recognizes the items picked up by the visitor as it’s connected with the stock database. When exiting the store, a customer can use an app’s account or a payment card to pay for the chosen groceries with a smartphone.
Just like virtual assistants at your house or in your smartphone, in-store robots use the ASR (Automatic Speech Recognition) technology that helps to identify human speech and turn it into text. Robots can answer after processing the customer’s inquiry using predefined algorithms.
3. Personalized recommendations online
Several use cases for e-commerce websites:
- Recommending items related to the one reviewed by the user;
- Giving hints at what other shoppers with similar preferences bought on the website;
- Offering products based on the customer’s previous purchases;
- Recommending the latest version of the viewed item.
4. Virtual dressing rooms
With virtual fitting rooms, people don’t have to leave their homes to find a perfect item or outfit. The AI technology places the item on the customer’s image to get a better understanding of the size, style, and color.
5. Mood tracking
Your employees get a notification about an annoyed customer and can approach them immediately. This innovation boosts buyer satisfaction and expands your loyal audience faster than traditional methods do.
6. Visual search
Visual search allows people to upload images of the item they are interested in and get products of similar colors and shapes. This is a great feature for big retailers with a wide range of items on offer.
In the CHI Software blog post, you’ll find out how world-renowned retailers using AI have changed their businesses and relations with customers. Click for a detailed overview and several hints based on our expertise.