How Artificial Intelligence (AI) Transforms Retail
Artificial Intelligence has opened several opportunities in physical and virtual retail to empower consumers. In the coming decade, the focus areas will be checkout-free shopping, biometrics payments, optimized supply chain, and analytical-driven decision making.
There are multiple benefits of AI in the retail industry. By transforming customer relationship management, sales, logistics, and finance, applying AI in business functions boost the operational revenue. To an extent, AI is generating jobs in retail, as opposed to positions taken away due to AI. AI has led to decreased customer complaints and higher sales volume. These benefits show tremendous potential for future retail.
In a report by Statista, more than 85% of customer service interactions will be powered by AI in 2020.
A similar retail banking experience by HDFC Bank has enhanced customer experience inside the branch itself. HDFC Bank launched IRA 2.0, a Machine driven-AI to answer FAQs and provide a seamless retail banking experience. From creating accounts, managing expenses, providing loans and offers, and assisting in investing in mutual funds, IRA 2.0 can also manage tax for the customers.
Artificial intelligence is also assisting in inventory management, financial reconciliation, and restocking for big retailers. By using AI, retailers can decrease costs, avoid stocking up items with low volume sales and increase the delivery turnaround time. It also aids in understanding the seasonal demand of the products and identify the right time to stock during a given season. This reflects enhanced sales and unforgettable customer experience. Consumers never face out of stock units, which solves a large problem for both supply and demand side.
Customer Relationship Management
Customer relationship management is the foundation of building a long-lasting relationship with the customer and nurture the customer lifetime value. Artificial intelligence provides various customer trends and insights to prioritize customers according to value, time duration, deal size, recurring customers, and more. This provides businesses with a clear segmentation of their customer audience and helps them to craft a perfect product positioning strategy to boost sales. Customers largely benefit by providing their insights into the systems, which include past purchases, buying behaviors, brand preferences, and taste. Systems analyze terabytes of data to crunch and predict product combinations for customers and provide trends.
Payments
Artificial Intelligence and payments seamlessly blend to provide a cashless retail experience where the consumer can walk in, buy products on the shelf, and the AI camera can self analyze the products in the cart, scan barcodes and directly raise an invoice on the consumer’s credit card/wallet.
A similar experience has been deployed by Amazon Go, a retail experience that uses deep learning algorithms, sensor fusion, and computer vision to optimize departmental retail stores. By using these technologies, Amazon Go stores have no lines for billing and provides an option for the consumer to pay directly from any payment method they want. In the last five years, the stores are outgrown from 1 to 6, and will only rise in the coming future.
Using artificial intelligence-based algorithms, payment services are also dealing with fraud detection and money laundering. The system can be trained to model the crackdown of fraudulent payments and reduce unidentified transactions. PayPal Inc. has reduced fraud to 2.3% of revenue using machine learning algorithms.
eCommerce and Logistics
The rampant online buying behavior worldwide provides massive opportunities for the world of logistics and shipping. By using Artificial Intelligence in food-tech business, it helps to deliver the food order through the most optimized path in the city, by understanding weather, traffic circumstances, and more. Companies are betting high on timely delivery by understanding by breaking all geographical limitations. This has also lead to drones for delivery by Amazon. Drones bring the shipping time to less than 30 minutes from the warehouse. Delivering products through the air is an uncharted territory which various big retailers and marketplaces are planning to get in.
It is evident that Artificial Intelligence is transforming and revolutionizing the Retail Industry, which will only lead to enhanced customer experience, increased revenue, and new unlocking new territories to conduct business. Not only big companies but also small and medium enterprises are adopting AI in-store to increase revenue and optimize operations.
Virtual Trial Rooms
Virtual trial rooms can save storage space, reduce size issues, and can lead to a less time-consuming experience for the consumer. In a physical retail experience, it’s impossible to try out every option in the store. Virtual trial rooms are Digital Mirrors that make shoppers try hundreds of dresses standing just in front of the mirror. Shoppers have the liberty to experiment with their outfits using a touch base interface, choosing multiple colours, sizes, and then make the final purchase.
Experiential Retail
eCommerce has disrupted the traditional brick and mortar sales and already has captured a 22% market share of the whole retail paradigm. In the experiential retail model, it revolutionizes the customer experience by blending technology in the stores. Creating digital hotspots in the store attracts millennials to spend and relate with the brand. By offering personalized discounts and creating an engaging environment, technology like AI and computer vision will carve the next decade of retail.
Retailers worldwide are expecting to benefit from AI in customer-facing functions. More than 71% of thought leaders in leading organizations perceive AI and Machine Learning as a total game-changers of the business landscape. Moreover, 61% of respondents indicated that AI is useful in singling out opportunities using data.
