Retail and Artificial Intelligence: a perfect fit?
As a retailer, you want to offer as much added value as possible to your customer, both in-store and online. You do this by responding to your customers’ individual needs to the best of your abilities. Now that the dust from the first wave of digitisation has settled in the retail sector, it is time to take a step further. The term Artificial Intelligence (AI) has been making the rounds in the media for some time now and practical applications are slowly emerging. But what are the opportunities for the retail sector?
In part, AI is nothing new. We know par excellence in the retail sector that we can use it to predict search behaviour. In doing so, data is converted into concrete insights. Thanks to AI we have very detailed analyses of the wants and needs of the customer. Important data points are being analysed deeper and faster than ever before. This development has a strong impact on product recommendations. Thanks to AI, a retailer knows exactly which product a consumer wants at what time. This ensures that you can respond more effectively to buying needs.
But AI can go much further than that, in that it can eventually gain a form of actual awareness and can reason itself. This means that algorithms are measured in a much more nuanced fashion and are able to predict real-time behaviour. And that offers opportunities, especially for the retail sector where the customer experience is so essential.
The role of AI in retail
Imagine, you walk into a store on a Thursday night and a digital assistant is ready to advise you as soon as you walk through the door. Based on your past purchases and recent search behavior, it generates personalised recommendations for you, taking into account external factors such as the season and current weather. Are you just looking for a waterproof winter jacket? One without down, because of your allergy? The item is then immediately available for you, without you having to search the aisles. Very handy indeed.
Improving the customer journey and experience by providing proactive and personalised service is an important opportunity for use of AI within retail. In fact, it offers opportunities to make the customer journey even more relevant and more suitable for your customer. But there are also opportunities for AI in the back office. Think about optimising the layout of your stores based on items that are often purchased together. Or the perfect inventory management system where AI helps to predict which items will be popular and in which size.
So: a perfect fit?
Worldwide, retailers are increasingly using AI to personalise the customer experience and to make valuable connections with customers. Think of big companies like Starbucks and Amazon. For smaller players, investments are often too high to make it worthwhile. But we all know how fast prices can come down with technological developments.
So AI in retail seems closer than ever, and when the time comes, it is essential that retailers are ready to seize the opportunities it offers.
Are you curious about what the store of the future will look like? Take a look at our infographic The Store of the Future to find out.