Artificial Intelligence (AI) along with other digital technologies has fully changed the retail landscape forever because it is enabling new and exciting opportunities, the likes of which have never been seen before.
AI is enabling an end-to-end service to customers, meaning those retailers which haven’t already should fully consider implementing AI into their operations. Retail has always been a fast-paced, low-margin sector, however, success in the industry now means keeping up with advanced technology. Some retailers might not have considered implementing AI into their business operations before, but now more than ever is the right time to do so.
Why retailers should look to digitally transform their operations (if they haven’t already)
The innovation of AI stems from the concept of digital transformation, which can be defined as the use of digital technologies to enable innovation and creativity. Every industry has ‘digitally transformed’ to some extent, but not all retailers have embraced this or are using it to their advantage. Some retailers might be put off by the initial cost of digitally transforming their business. However, the investment is beneficial because retailers will see both immediate short-term benefits, such as streamlined processes and operations, and longer-term benefits such as increased revenue and profit, and increased customer loyalty because AI should make the shopper experience more personal.
Retailers need to ensure they are being as productive as possible, and streamlining business processes through AI can go a long way to help this. To give a real-life example, as consumer demands have changed significantly through the enhancement of digital technology and e-commerce shopping, customers have very high expectations when it comes to engagement with a retailer. If a customer has a problem, they expect a quick and helpful response. This is where digital transformation comes into play – a retailer can implement a chatbot as an alternative so a customer’s problem can always be addressed quickly, and no matter what time of day.
This is why digitally transforming an operation such as this is beneficial, as it not only saves human employees time, but the retailer can always be assured the customer will get a response to their question. AI has enabled these kinds of processes to be developed and rolled out more frequently, and while the initial cost of investment may be high to begin with, the benefits in the long run are worth it.
The benefits of artificial intelligence within the retail industry
However, it’s not just the customer facing side of the business which retailers will benefit from the implementation of digital transformation and AI. AI can also improve the supply chain. Retailers have to deal with large volumes of data in the supply chain every day, meaning there is a growing need for more sophisticated data processing solutions. Implementing AI makes it easier for the retailer to analyse these larger volumes of data, which therefore will allow retailers to obtain trends and patterns in their operations, and can accordingly act upon these findings to make the supply chain more efficient. Spending on AI in the retail supply chain is likely to increase to $10bn a year by 2025, suggesting retailers are already valuing the benefits of AI to this part of the business.
AI also allows retailers to better understand the data and behaviours of their customers. As a result of this, retailers can provide an intelligent, informative and convenient customer experience during the customer journey, based from AI generated insight. AI has also allowed businesses to reimagine the customer experience through personalisation. Despite the challenges of robust data compliance laws such as GDPR, customers now expect some sort of personalisation during their shopping experience. AI can help with this challenge by capturing and analysing shopping trends. The retailer can then use this data to offer a personalised experience based on what they think the customer will be interested in.
In the digital era, consumers have power over retailers, but this was not the case 20 years ago. They are able to make more informed decisions and enhance their buying experience through research, reviews and ease of access to mobile and web applications. Brand loyalty isn’t as strong as it once was, meaning if a customer has a bad online experience at some point during the customer journey, they may choose next time to shop elsewhere. The enhancement and application of AI, however, should now ensure a seamless customer experience, meaning customers should always have a good experience with the retailer who has implemented AI technology.
How successfully implementing artificial intelligent technology can win new customers
In order for businesses to stay ahead of their competitors, they need to ensure that they’re doing everything they can to give their customers a great experience. Customer habits can change, and businesses need to think innovatively to stay one step ahead. How can they do this? Rapidly experimenting with AI can be a crucial tool to identifying patterns and trends.
Whether good or bad, customers remember experiences, and technology gives retailers the platform to offer a truly unique and memorable experience.
Some retailers such as Ikea do this well. Ikea has implemented augmented reality to allow buyers to see how furniture will look in their home through their smartphone before making any significant investment. This is a well thought-out idea, as it allows potentially new customers to browse and visualise different potential products through the application. This has only been possible through the development of AI technology, and is a great example of how implementing AI can ensure businesses stay ahead of the competition.
Retailers are now fortunate enough to have an opportunity to enhance their customer experience in ways previously thought not possible. Retailers who haven’t already should consider implementing AI technology within their business structure. However, they must ensure time is spent choosing a tailored solution which will work for their business and customers.
Anshuman Singh, VP of digital business at Mindtree Europe