Artificial Intelligence (AI) has been the center of the talk for quite some time. Businesses and customers saw it as either expensive technology or unrealistic fiction in the short term. Yet here we are, living in the days when AI is no longer an alien norm but an accessible solution for everybody. And retailers are one of the most active trailblazers to adopt the renowned technology. Let’s explore how businesses and customers have been benefiting from AI development in retail industry and more.
1. AI Expansion into Retail Sector Accelerates after the Pandemic
It is no exaggeration to say that the pandemic has given AI its moment, especially in the retail sector. Global Market Report states that AI in Retail Market size exceeded USD 2 billion in 2020 and is expected to grow at more than 30% CAGR between 2021 and 2027.
The fact that people being limited with pear interactions has asked for one ultimate solution to automate various touchpoints, which previously was manually handled by humans. Such demand has generated new ways of shopping like click and collect, delivery, reservation systems to make appointments at your local retail store, and the development of more autonomous stores. All of this coming to reality was thanks to AI development in retail industry. And every surviving in-house retailer is adopting at least one of these technologies to stay on the ground until now.
What is more… The vast majority of customers are now moving online has also changed eCommerce behaviors. In the Accenture report, 91% of consumers say they are more likely to shop with brands that provide offers and relevant recommendations. The desired eCommerce platform should play the role of a personalized shopping assistant to every shopper they serve. This is where AI works its magic by analyzing digitized customer behaviors and their shopping journey across channels, so the online platform should be so comfortable and effortless even before the customers know it.
2. Three Most Promising AI Use Cases in the Retail Sector
The pandemic dragging on shall make those fresh AI alternatives stay longer and become the new norm for the retail sector. Ranging from chatbots to recommended engines, the trend is so diverse and widely adopted that customers have been familiar with their existence within a year.
Chatbot has been around for quite some time. Yet it is until now that the solution’s popularity surges back again. More people shopping at home during the pandemic needing help with their shopping immediately, and round-the-clock is the appropriate answer to such attention. In fact, retailers saw an 86 percent increase in customers using self-support sessions from March to May of 2020, when the COVID-19 became widespread in the US. The most used cases for the chatbot in retail encompassing FAQ Support, sending personalized deals, and service requests.
And the tech solution is seeing to bring very positive results. In IBM’s paper, it is stated that chatbots can help businesses save up to 30% on their customer support costs. And by 2024, Insider Intelligence predicts that consumer retail spends via chatbots worldwide will reach $142 billion—up from just $2.8 billion in 2019.
At the end of the day, we can see that chatbots are an efficient way to take advantage of the increasingly powerful possibilities of AI development in retail industry sales and customer service. With the right approach and implementation, a chatbot can improve the shopper's experience and boost revenue, all while saving your business time and money.
AI-driven personalization in retail varies from retargeting customers to predictive suggestions. A website visitor will spend time browsing products, clicking links, exploring different catalog pages, and adding/removing items from the cart. This behavior can reveal valuable insights for e-commerce marketing. The AI personalization engine analyzes visitor behavior and re-targets ads accordingly. And the story is also revolving within the website itself as products are either suggested when a customer clicks on other products. Someone puts shoes in a basket, and so an AI-powered engine might suggest a coat or pair of jeans that go well with them, for example. This could either happen before a customer goes through checkout – especially if they’re close to receiving free shipping – or afterward.
It is fair to say that eCommerce has been so much benefiting from artificial intelligence. Retailers that have implemented personalization strategies see sales gains of 6-10%, a rate two to three times faster than other retailers, according to a report by Boston Consulting Group (BCG). It could also boost profitability rates by 59% in the wholesale and retail industries by 2035, according to Accenture.
c. Automatic Logistics
Modern supply chains represent complex systems of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. And customer demand for transparency and quick support with their delivery also puts both retailers and logistics providers in more challenges. Yet AI-backed supply chain solutions now can catalyze information sharing across organizational units and geographical locations, enabling decision-makers to have an enterprise-wide view of the information needed in a timely, reliable and consistent fashion.
Despite its gigantic budget for AI development, 61% of executives report decreased costs, and 53% report increased revenues as a direct result of introducing AI into their supply chains (McKinsey). Lower inventory-carrying costs, inventory reductions of up to 75%, and more inadequate transportation and labor costs are among the most significant areas of savings.
However, it was reported that only 12% of supply chain professionals say their organizations are currently using artificial intelligence (AI) in their operations in 2020. This means that enterprises and especially retailers need to take AI into account in a more serious and decisive way. As all is seen, the market and the customers have been fluctuating unpredictably in demand. It is vital to take a step forward and get ahead of the need before it is out of your control.
3. AI is a Competitive Advantage for Retailers, but not a Shortcut to Success
Adopting AI development in retail industry is not a shortcut to success. With Amazon investing in R&D at a rate of US $22.6 billion in 2017, and Alibaba starting AI investment activities in 2013 by a deal with Xiao-i (小i机器人) - a chatbot company, it is no exaggeration to say the profit and revenue boost that retailers expect would not be so near with AI adoption. Time for research, testing, adoption, modification of AI varies for different businesses as they serve different customers, provide different products, and stays in different markets.
Moreover, brands and business leaders also need to be aware of the trends shaping the future of retail and the changing priorities of consumers. Transparency, purpose, sustainability, and inclusivity are among the most critical concerns retail businesses need to address publicly to secure their future success.
A different brand needs a different AI approach. We at SotaTek have seen and gone through so many kinds of challenges with our clients regarding AI adoption. Yet, those challenges now are condensed into valuable pieces of experience to optimize AI power. Tap into SotaTek's AI and machine learning solutions development services to augment your retail business with AI and ML solutions at scale. Let us hear your story and deploy the tailored Artificial Intelligence latest developments only for your enterprise. Contact our Artificial Intelligence developers now for an in-depth consultation!