Here’s why AI can boost your customer experience

Artificial intelligence is revolutionising industries across the board, and retail is no exception. Historically associated with sectors like healthcare, finance, and digital marketing, AI is now making significant inroads into both physical and ecommerce retail spaces. Hitachi Solutions has estimated that $40bn (£31.4bn) in additional revenues was driven by AI in retail in a three-year span to 2020. The application of AI in retail is multifaceted and offers a range of benefits that enhance customer experiences, streamline operations, and ultimately boost profitability – but how does it work? AI leverages machine learning and predictive analytics to process vast amounts of data to identify patterns and provide actionable insights. Basically, this technology transforms raw data into strategic decisions that can help retailers forecast demand, optimise inventory, and personalise customer interactions. The ability to analyse customer data, which has been collected through various channels, enables retailers to create a more engaging and efficient shopping experience, both online and in brick-and-mortar stores. One of the most significant advantages of AI in retail is its ability to enhance shopper engagement through the use of AI-powered chatbots and in-store kiosks. These provide instant assistance to customers, answering questions and guiding them through their shopping journey. The immediacy of on-demand help improves customer satisfaction and frees up human staff to focus on more complex tasks. Additionally, AI-driven personalisation tools analyse individual shopping behaviours and preferences, which comes in handy for retailers who wish to tailor their marketing efforts and product recommendations to each customer. This level of customization not only boosts sales but also fosters customer loyalty by making shoppers feel understood and valued. AI can also be used to manage inventory by using predictive analytics to forecast demand accurately. While traditional methods like spreadsheets still have their place, AI provides more precise data, helping retailers maintain optimal stock levels and reduce excess inventory. This leads to fewer lost sales due to stockouts. It also minimises the costs associated with overstocking. Moreover, AI can streamline supply chain operations; AI-powered forecasting can reduce errors in supply chain management by up to 50%, according to McKinsey and Company. This reduction translates into significant cost savings and improved efficiency, as AI can identify the fastest retrieval routes in warehouses, automate markdown processes, and provide real-time inventory updates through camera vision and sensors. The ability of AI to combat retail shrinkage is another crucial benefit. Shoplifting and inventory loss have long plagued retailers and have become a hot-button issue, but AI can offer new solutions to this persistent problem. By using computer vision, digital sensors and motion analytics, AI can detect suspicious behaviour and prevent theft during self-checkout processes. This technology provides near real-time security, helping retailers protect their assets and reduce losses. But AI's impact on the customer experience extends beyond operational efficiencies; augmented reality (AR) applications allow customers to virtually try on products, which offers a more interactive and satisfying shopping experience. This technology reduces the guesswork involved in online shopping and decreases return rates, which can significantly impact a retailer's bottom line. For example, Levi’s and Walmart have developed AR tools that enable customers to see how clothes would fit them, or how they’d look on models of different sizes. Such innovations make shopping more engaging and reduce the inconvenience of returns. Furthermore, AI can streamline the checkout process in physical stores, which can make the whole shopping experience much smoother and even out peak footfall periods. By automating certain transactional processes, AI allows customers to avoid long checkout lines. Amazon Go stores exemplify this innovation, where customers can walk in, pick up items, and leave without waiting in line, thanks to computer vision and other AI technologies that automatically record their purchases and charge their accounts. Personalisation is another area where AI excels. By analysing browsing and purchasing data, AI helps retailers understand customer intent and tailor their offerings accordingly. This level of personalization extends to product recommendations, targeted promotions, and tailored marketing campaigns, which can significantly enhance the shopping experience and increase customer retention. Personalised experiences not only drive sales but also create a deeper connection between the retailer and the customer, fostering loyalty and repeat business. AI also raises the standard for customer service. Unlike traditional retail models where service is limited to store hours, AI-powered bots provide 24/7 assistance that can answer questions, guide purchases, and even process transactions. This constant availability ensures that customers receive support whenever they need it, enhancing their overall shopping experience. Moreover, AI can handle a large volume of inquiries simultaneously, making it a cost-effective solution for retailers looking to improve customer service without significantly increasing staffing costs. The transformative potential of AI in retail is immense, offering retailers the tools they need to stay competitive in a rapidly evolving market. The key to successful AI implementation lies in choosing the right technology partner that leverages AI to enhance retail operations, providing the expertise and innovative solutions needed to unlock the full potential of AI. As AI continues to evolve, retailers that embrace these technologies will be well-positioned to lead the market, delivering exceptional shopping experiences and achieving growth.

Here’s why AI can boost your customer experience

The application of AI in retail is multifaceted and offers a range of benefits that enhance customer experiences, streamline operations, and ultimately boost profitability

Check out our weekly podcast: 'Talking Shop by Retail Sector'

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