Artificial intelligence (AI) has the ability to completely transform retail by offering a level of automation, personalisation and efficiency that improves customer experience as well as help retailers make instrumental business decisions. According to TotalRetail’s Retail Technology Report, AI and machine learning will have the greatest impact on retail over next few years. Already, it is estimated that AI is responsible for $40 billion of additional revenue in a 3-year span.

Retailers are beginning to understand how technology can lead to a competitive edge. Thus, by 2022, retailers are expected to spend $7.3 billion annually on AI alone. The global Artificial Intelligence in Retail Market is estimated to reach 20.05 billion by 2026, CAGR growth of 39% from 2020 to 2026 in spite of the coronavirus setback.

Let’s look at how AI technology can transform brick-and-mortar stores:

1) Facial Recognition and visualisation technology

Sephora’s uses AI based facial recognition and visualisation technology to provide personalised recommendations to its customers. You can find the perfect shade of lipstick, foundation, or any other make up and try it on virtually before purchasing. This saves customers money and stress and they end up satisfied with the products.

2) Smart mirrors

Hurr Collective uses smart mirrors to display all available stock. Uniqlo goes beyond displaying the products and uses AI powered UMood Kiosks which analyses brainwave responses to stimuli (usually videos). Then the algorithm accurately suggests products; and since the products are matched with the current mood of the consumer as well as their preferences, it has a higher chance of conversion. 

3) Smart Digital Signage

Computer vision incorporated digital signage can measure customer engagement and provide advertisements and promotions based on gender, age, mood and more – facial recognition technology can even work out the reactions of consumers. As a result, in-store advertisements and promotions can be on rotation, providing targeted and personalised content.  

4) Chatbots

Online retail had implemented chatbots a while back to provide instant help to consumers. They can also be useful in-store for consumers to obtain necessary information without the need for face-to-face contact with sales staff. Tommy Hilfiger and Burberry, who already have this technology in their respective brick-and-mortar stores, have reported use from consumers. You can even use smart QR codes to educate people further on the products via multimedia or look for sizes.

5) Machine Vision

Amazon uses machine vision to accurately scan items in a customer’s cart and provide a smooth check-out experience in its Amazon Go stores. This is extremely convenient for shoppers; and the novel idea has shoppers wanting to enjoy the experience leading to an increase in download of the app. Juniper Research predicts such technology will see a boom from $2 billion in 2020 to $387 billion in 2025 due to its popularity among consumers and retailers. Furthermore, as an added benefit, AI and machine learning technologies can improve fraud detection.

6) Robots

The robotisation of stores can eliminate waste and inefficiencies. For example, Walmart’s shelf scanning robot keeps a tab on stock levels and automatically restocks shelves as needed. Similarly, Kroger’s sensors track temperatures in different areas of the stores, including fridges and freezers.

Furthermore, robots can eliminate the need for cashiers, shelf stockers, and even cleaners. Amazon Go stores, for instance, only require 6-20 staff members. Nick Maynard, analyst at Juniper Research said, “To compete with eCommerce disruptors who heavily rely on AI, traditional retailers must adopt AI rapidly to boost efficiency.”

7) Object Tracking

Object tracking will provide insight into the customers journey and their interaction with products. The data will also reveal which promotions or products resonates more with which types of customers. You can use this data to create personalised and frictionless shopping experiences which will lead to improved customer satisfaction and brand loyalty.

Machine learning can generate important insights which can be used to create personalised offers, promotions, and pricing strategies. You can even use customer preferences to inspire new products and them price correctly.


In summary, AI can be used in many different ways to drive better business outcomes. Creating a competitive business model using technology is the key to competing with online retail.


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