Using AI to modernise CX in retail

The retail sector is at a crossroads. At a time when products and prices can often be easily matched, it is increasingly the customer experience that sets brands apart.

Research has shown that companies that prioritise customer experience see revenues typically grow 4 – 8% above competitors1. Whether browsing in-store or online, modern consumers are increasingly demanding seamless, personalised retail experiences – not just transactions – at every touchpoint. To remain competitive, and build both customer loyalty and revenue, retailers must deliver an exceptional customer experience (CX), and that means tailored, data-driven insights and proactive action when things go wrong. And that’s where AI is offering some serious potential for retailers…  

Outdated CX strategies are holding retailers back

Despite evolving customer expectations, many retailers continue to rely on traditional approaches that are outdated and ineffective, such as time-consuming paper-based stock checks, stamping loyalty cards by hand, and returns and exchanges that can only be completed face-to-face in-store. These manual practices also increase the likelihood that your customers’ primary experience of your brand is via junior frontline staff.

Additionally, multiple disconnected customer feedback systems and siloed data make it virtually impossible to gain useful, real-time visibility to enable CX issues to be spotted and acted upon quickly. As a result of these blind spots, opportunities are missed, the customer experience suffers, and reputations are damaged.

AI is redefining retail customer experience

AI is not new in retail – it has created significant opportunities to improve the retail customer experience across numerous touchpoints:

• Health and beauty brands use AI to recommend products tailored to individual skin tone and previous purchases. 
• Online-only retailers utilise AI to process thousands of reviews and identify emerging customer feedback trends before they become costly issues. 
• Supermarkets deploy AI to adjust staffing levels and minimise queue times during predicted busy periods. 
• AI-driven loyalty platforms tailor offers based on real-time behaviour. 

But until recently AI has arguably been under-utilised and over-complicated in the field of CX. However, things are changing, and a new wave of connected AI-driven technology is helping retailers move from hindsight to foresight by providing granular insights into what is delighting – and frustrating – customers on a daily basis in real-time. This technology doesn’t just highlight poor customer experience, it reveals the root cause, and directs front line staff as to how to put things right.

Early adopters are demonstrating that this new breed of AI-driven CX can transform reactive customer service into proactive experience management, making it faster, smarter, and increasingly easy to manage.

Agentic AI is changing how consumers choose

When it comes to search, times are a-changing. Instead of searching for products, services, or shops themselves, customers are increasingly asking AI. Whether it’s “Find me the top-rated vegan restaurant in Bournemouth” or “Where is my nearest supermarket that offers free home deliveries?” decision-making is becoming more automated thanks to AI.

To provide accurate results, intelligent agents, aka agentic AI, evaluate customer reviews and ratings to arrive at a decision. As a result, online feedback has never been more influential or important, which means that if your CX isn’t consistently ‘top-rated’, your business won’t make the cut. And that means understanding – in detail –  what is and isn’t going right for your customers.

AI is transforming the CX back-end, too

While the front-end gets the spotlight, the real magic of AI often happens behind the scenes, and that is certainly true with Serve First’s platform. Gone are the days of trawling through numerous platforms, spreadsheets or managing separate feedback streams. Modern AI-powered platforms consolidate everything into one dashboard, turning fragmented CX feedback into clear actionable insights

Modern AI platforms consolidate fragmented CX feedback into a single, centralised dashboard, applying intelligent analytics to generate actions which are immediately sent to specific team members, enabling retailers to respond instantly. This allows retailers to fix issues quickly, maintain service excellence across every site, and build trust and loyalty with customers.

Take a fashion retailer as an example – a customer who has just used the changing rooms notes their dissatisfaction as they leave via a touch-screen ‘smiley face’ style feedback terminal. This information is immediately relayed to the manager in charge of that section of the store, alerting them to an issue in a particular changing room, so that a member of staff can be sent to check and correct the issue in question.

As this example shows, instead of just collecting information, new AI-driven solutions help retailers actually make use of it, and in smarter ways which reduce time spent analysing and speed up decision-making and action. This means that rather than customer feedback data just sitting in a spreadsheet or a report waiting to be reviewed in a monthly management meeting, retailers can respond immediately to service-related issues as they happen, improving the customer experience, and doing so as soon as possible.

In-store, this means incidents such as broken fridges or low stock alerts get sorted out before such issues become problematic. It also makes tasks such as cleaning and health and safety checks easier. This in turn ensures retailers meet compliance standards and have an automated digital audit trail, all ultimately creating a smoother experience for customers – whether you’re running a supermarket, fashion chain, or food-to-go outlet.

Looking ahead: The future of AI in retail CX

One thing’s for sure. We’re only scratching the surface of what’s possible. Tomorrow’s AI won’t just interpret and act on feedback, it will proactively anticipate it. Imagine CX systems that analyse browsing history, purchase behaviour, and the time of day or location to deliver tailored product suggestions on in-store displays. Picture AI voice recognition tools integrated into apps or smart devices to create a seamless, frictionless CX for busy or accessibility-conscious shoppers. Or AI that spots a spike in negative sentiment about a product and alerts the buying or marketing teams before it can spread further and negatively impact sales. Plus, AI tools such as biometric sensors and facial recognition could soon detect, interpret, and respond to human emotions to provide tailored customer experiences. And as agentic AI becomes mainstream, retailers will need to optimise not just for people, but for the algorithms that serve them. 

The future of AI in retail CX is intelligent and predictive. Retailers that embrace AI-powered customer experience management today are putting themselves on the front foot to be best-placed to thrive tomorrow. AI is more than a tool when it comes to CX, it’s a strategic ally in delivering the customer experience that a brand is aspiring to, building customer loyalty, brand love, and operational resilience.

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References:

1 – Bain.com

Contributed by Erol Ayvaz, CEO, Serve First