Generative AI in Retail: How to Use It, and Who Uses It

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Retail is one of the core industries in the world. It provides people with groceries, clothing, and other goods. As with any other industry, it is subject to changes due to technological advancements and global market shifts.

According to the NVIDIA survey, 98% of retailers are planning to invest in generative AI models over the next 18 months. And no wonder — who could say no to its benefits? Personalized suggestions based on customer data, supply chain management, improved customer loyalty, and inventory management are all powered by generative AI.

Today, we will explore how this technology affects the industry and how you as a retailer can benefit from adopting AI.

Understanding Generative AI for Retailers

Generative AI is a subset of artificial intelligence. It can generate new content based on the information it was trained on. Unlike some other AI-based solutions that are constrained to perform one specific task, these models can perform multiple tasks as long as they have data to learn from.

To put labels on the abilities, let’s talk about what generative AI models can do for retailers.

• Personalized recommendations: Ever wondered how store recommendations always know what to offer? That’s the work of generative AI. It tracks customer data regarding previous purchases and provides recommendations based on that. It’s very useful from a customer perspective since it saves time looking for what they need. At the same time, higher convenience increases customer loyalty, which benefits your business. A win-win situation!
• Virtual try-on: For many customers, buying clothes or accessories online is a chore. Since you can’t see how good the item fits you (or looks on you), there is room for inconveniences, such as returning items that didn’t fit and demanding money back. That’s the problem of the past now! Generative artificial intelligence can help visualize the product on a person, saving a lot of time and shipping fees for both businesses and their customers.
• Product design: The information era came to us with its benefits and trade-offs. One of those trade-offs is how fast market trends change. Luckily, generative AI can help you keep up with the fast pace of change. By inputting a bunch of parameters such as style, functionality, and material, you will get a new, trendy, and unique product. This will help you stay competitive in any market conditions.
• Visual merchandising: When discussing the retail industry, one problem people don’t cover enough is product placement. But you can’t ignore it since it is crucial for customer engagement and convenience. Generative AI can help with that. It visualizes a store layout and the optimal placement of goods.
• Inventory management: For retailers, going out of stock usually means losing your customers to competitors. That’s less than optimal, especially during festive seasons. To prevent this, generative AI can manage the supply chain and keep track of stock, alerting you when your stock goes low. On top of that, it can analyze sales data to accurately detect demand patterns and market trends. This ensures you will never go out of stock and significantly improve inventory management.
• Chatbots and customer service: Customer service is an important job, but it is very soul-draining as well. So, why not optimize it? By adding a conversational AI in the form of a Q&A chatbot to your store, you lower the need for human customer service representatives. Such chatbots can provide personalized customer experiences by finding products, placing orders, and answering questions.

As you can see, generative AI models in retail bring a lot of value. However, you need experts in the field to utilize it for your business. We at CHI Software are proficient in Generative AI consulting and development of such solutions for retailers.

Now that we know how it works, let’s talk about use cases of generative AI in retail.

8 Use Cases of Generative AI in Retail

There are hundreds of generative AI use cases in retail worldwide. We have picked the most interesting ones for you here.

Let’s Put it on eBay: AI-Powered Listings

eBay is one of the oldest platforms for people to buy and sell goods. Founded in 1995, this US company grew into 190 markets worldwide. To this day, the platform stays relevant, making around 10 billion USD in 2023.

In last September, they introduced new features powered by Generative AI:

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• AI-generated item descriptions: Platform users get a product description that will grab the attention of their potential customers with just a click of a button. Sellers can use those descriptions as is or tweak them a bit to fit the business’ tone of voice.
• Background removal tool: This feature already existed in some form, but now it is powered by AI to provide better results. It works the same way as generating an item description: users click the button and get a clean, transparent background instead of the old one. Easy!
• Improved listing: On most e-commerce platforms, when users want to sell an item, they need to type in its name, description, and parameters. eBay decided to simplify this process. All sellers need to do is provide a small amount of data to their AI assistant. After that, AI will analyze, research, and extrapolate the required information from the seller’s data. Users just take a photo of the item they want to sell and upload it. That’s it — leave content creation to AI!

According to eBay’s research, around 95% of people who used new AI-powered features kept using them in the future. At the same time, customer satisfaction grew to 80%.

Achieving Success with Generative AI: The Story of Walmart

Walmart is another retail corporation from the USA. It specializes in selling goods through a network of hypermarkets, department, and grocery stores. With over 10,000 places in 24 countries, Walmart’s revenue was 611 billion USD in 2023.

Nowadays, you can’t earn such groundbreaking profits by operating “the old way”. Walmart has always been the pioneer in adopting new technologies, so it’s no wonder they are our next example of generative AI in retail.

• AI-powered shopping: Some people may be overwhelmed when they are presented with more than two choices. Let’s say a customer wants to stock up on food but can’t decide what bread to buy since there are around ten different brands with different tastes. Now they can just go to Walmart’s website or use their app, type in “I want to buy bread that will go with peanut butter and jelly the best,” and an AI-powered search bar will provide them with the most suitable option.
• Associate assistant: Walmart has a chain of associate stores. To help them with tedious tasks, Walmart introduced the “My Assistant” app. This generative AI-powered solution helps associate stores with documentation, speeds up the drafting process, and helps as a creative partner. It can also track competitor price movements and help out with inventory management. This allows associate stores to focus on business improvements instead of routine store maintenance.
• In-store chatbot: Not only online customers and associate stores benefit from generative AI features. For in-store shopping, Walmart has a generative AI called “Ask Sam”. This chatbot can help visitors find items, look up prices, and answer FAQs.

All of these features combined improve customer experience online and offline. On top of that, they make Walmart’s associates more efficient in their operations.

Beauty in Generative AI: CHI Software Case

There’s hardly a limit of AI use cases in e-commerce. Here’s our experience we’d like to share.

Our client from America is in the beauty and cosmetic sector of the retail industry. They were considering ways to improve customer experience, retention, and inventory management. So, we presented them with a solution that does just that.

Our team has created a generative AI-powered app that utilizes a recommendation system tailored to each user and a chatbot consultant who can reply to FAQs. Let’s look at those two features more closely:

• Recommendation system: Each user receives personalized recommendations for skincare products based on facial analysis. Users may be prompted to input their cosmetics preferences when navigating through the app’s recommendations section. After that, AI generates a list of products that would fit the user best.
• Chatbot consultant: To improve customer service, we introduced an AI chatbot supporting the client 24/7 and tailor product recommendations based on individual preferences. All of this combined reduces operational costs for business.

We have seen the fruits of our labor in some of the client’s data. The AI-powered app effectively increased customer satisfaction and loyalty, improved customer retention, and opened valuable insights for business.

For example, the client reduced the stockouts because the system allows our client to see which products will potentially go out of stock.

To read more about this project, click here.

Carrefour: Generative AI Pioneer from France

Another case of generative AI in retail comes from Carrefour. This French business operates in over 30 countries and specializes in wholesale. It is the seventh-largest retailer in the world, with revenue of 91 billion USD in 2023.

Last year, they decided to start leveraging generative AI and already announced new features.

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• Advisor: in June 2023, the brand introduced a new conversational AI. It helps customers choose products based on their budget and food constraints. It can even give customers ideas for meals and anti-waste options based on reused ingredients. It also composes associated recipes and baskets.
• Smart descriptions: However, Carrefour didn’t stop there. To improve the online shopping experience, they have utilized generative AI. Now it’s responsible for creating detailed item descriptions providing customers with more information and helping them pick the right item.
• AI support: The two features above were targeted mostly at customers, but the retailer has also developed an AI tool for internal use. It helps with purchasing processes and drafts invitations to tenders.

These features might look small for some people, but their impact cannot be overstated. From enhanced online shopping experience to streamlined internal processes, generative AI in retail pushes businesses to new heights.

If you like generative AI as much as we do, you can find four more use cases in our original article.