The global artificial intelligence (AI) market in retail is expected to grow from $5 billion in 2021 to over $31 billion in by 2028, at a CAGR of 30.5%. The reason? AI is automating tasks with speed and efficiency, helping retailers make better business decisions where they’re able to save costs and discover opportunities.
Let’s look at how AI is transforming brick-and-mortar retail:
- Customer behaviour analysis
Data collected with AI gives retailer detailed insights into how consumers navigate the store, which products, branding, or marketing they interact with, and what they ultimately purchase.
Using the data on consumers’ buying patterns, retailers can optimise stores, products, and marketing in a way that fulfils their consumers’ needs. Such personalisation will elevate consumers’ shopping experiences and forge long-term loyalty with the brand.
Cross-selling and upselling is another benefit of AI analytics which has direct impact on conversion. The more data is collected on shoppers’ previous purchases and interests the more accurate product suggestions will be, leading to larger transactions.
Furthermore, A/B tests can be done with product placements, store layout, marketing etc much faster, saving retailers time and resources.
- AI chatbots
AI chatbots provide high level of customer service as they are quick, efficient, and accurate. Chatbots have the ability to search though thousands of products and offer the perfect suggestion, saving consumers time on browsing the store.
Some chatbots can even use customer uploaded pictures to pull up the exact or similar item; others can send personalised direct notifications to consumers. Thus, businesses like Burberry and Lidl agree that AI chatbots help improve upselling and cross-selling, ultimately improving store revenue.
- Virtual try on.
AI virtual try on is offered in the form of mirrors and apps. Zara and Ralph Lauren are two of many retailers who have virtual mirrors in their stores to improve brand experience. These virtual mirrors allow consumers to try on multiple products without needing to change. No more messy hair, make up transfer and time wasting on changing.
For retailers, the customer is served much faster and the product is not damaged when tried on. More direct results are seen by companies like Levi’s, Gap, Brooks Brothers who have installed virtual fitting kiosks and reported massive sales increase too.
Make-up brand Sephora created an AI based app for virtual try on of their products where they are able to suggest shades of make-up and alternatives. This had launched at the perfect time in the midst of the Covid-19 pandemic when people were worried about trying on make-up.
- Cashless stores
Amazon’s Just Walk Out Technology is an example of AI based cashless stores. AI based 3D cameras and scanners recognise products that have been purchased and charge the shopper automatically through an app.
Consumers are always looking for frictionless checkout experience and this eliminates the need for long queues, makes checkout a more seamless without needing to interact with a cashier, and saves time.
For retailers, with thousands of AI cameras, shoplifting is near enough impossible. And retailers can save on costs by reducing the number of staff required in the stores.
The best thing about AI is that it’s self-learning. The more data you feed it, the more accurate it will become.
Using historic data, AI can predict footfall, how many units of a product will sell, which type of marketing has the most engagement, which products to bundle together and more.
Consumer behaviour is changing quickly and much more frequently since the outbreak of Covid-19. AI can make predictions on future changes in consumer behaviour so you can stay ahead of the curve and prepare early.
In summary, AI can make huge improvements to the operations of brick-and-mortar stores. It will gather information on consumers, delight them with seamless shopping experience and be prepared for the changes in their needs. With AI providing actionable insights into consumer behaviour, retailers have no excuse but to improve personalisation which will ultimately improve loyalty and store revenue.