Retail has transformed dramatically over the past decade. Physical stores previously served as the main touchpoint for customers. For decades, commercial centers and malls were the pinnacle of modern consumption.
The retail experience could previously be characterized as, well, predictable. Franchises followed the same guidelines across locations nationwide. The primary way retailers received feedback was directly from their customers and employees. If a certain style or material wasn’t landing well with customers, the sales associates would gather that information by working the fitting rooms.
Now, the emergence of generative artificial intelligence (gen AI) is redefining the retail landscape, paving the way for customized experiences that respond to events in real time. AI technology is reshaping how customers experience brands.
What is Generative AI?
Generative AI uses advanced algorithms to enhance the retail experience, benefiting both companies and consumers. In the retail industry, gen AI has various use cases. It’s helping both customers and retailers save time and make the shopping experience more seamless. It enables personalized customer interactions, automates tasks, drives revenue growth, and boosts customer satisfaction.
By 2030, generative AI is set to grow to a staggering $164 billion dollars. Major players like Microsoft, IBM and Amazon are expanding their market share into the AI retail market for this very reason. Early adoption here will be key as this technology is proving to help retailers create more profitable outcomes.
How Does Gen AI Help Retailers?
Gen AI is becoming industry standard at all stages of the retail business cycle. Well analyzed data sets are the key to success. Generative AI creates an environment that ingests and quickly forms a narrative around the data that our devices are constantly collecting from us. Such insights can prove crucial to retailers in making more accurate predictions for key facets of the business such as inventory planning, demand forecasting, customer relationship management and ecommerce strategy.
Inventory Management and Customer Demand
When it comes to product based businesses, quantity is always a difficult question to answer. Small and large business owners alike ask, “How much inventory should I buy?” If there isn’t enough inventory, there’s revenue left on the table. If there’s too much inventory, then the business will lose money. Hitting revenue goals requires striking the perfect balance, and gen AI is now assisting in this process.
AI backed inventory management systems using historical data, market fluctuations and customer behavior to predict the needs of the businesses in the future are just one use case for Gen AI in the retail industry. A system may take into consideration an upcoming election or even popular culture to forecast inventory needs. This type of forward thinking approach can help retailers optimize their supply chain to align with customer demand.
Standout Customer Relationship Marketing
AI is definitely changing media production. Retailers are using it to stay ahead of the never ending content cycle. Due to the volume of competition in the market, customer relationship marketing (CRM) programs must remain consistent to connect with customers. Generative AI produces content fast and in an attempt to operate more efficiently, some programs outsource tasks, such as copywriting, to tools that use gen AI.
If subscribers are responsive to a certain set of SMS automations, they may receive follow up messaging that was written by generative AI. The same can go for email subject lines or even something more complex as a full email retargeting program. Once the system has a few touch points with the subscriber, gen AI can take it from there.
Driving E-Commerce Strategy
Generative AI also plays a crucial part in what visitors see when they land on an ecommerce website. Many brands use AI-powered bots to address customer service requests with speed and efficiency, reducing the need for customer service agents.
Ecommerce web platforms now use predictive analytics to present the best assortment to online shoppers. The homepage you see when you visit a website may not be the same for your neighbor. Based on past actions, yours could be one of many variations predicted to best suit your interests. Further, the assortment may be merchandised towards your taste as well. If you’ve been searching for skirts and dresses, the algorithm will bring those to the top of the page.
Companies are aware that most people are not making it into the store for their purchases. If their products are worn on the body, virtual try-on experiences powered by AI provide customers with an interactive preview before making a purchase. Retailers like Warby Parker use this so that shoppers can “try on” their glasses.
Further, gen AI tools are helping consumers make purchasing decisions. Many review platforms are fine tuning their systems so that brands can optimize reviews. Some platforms are able to summarize the overall sentiment towards a product and suggest your ideal size based on other reviews. All of these efforts reduce friction, dispel doubts and help shoppers to make informed choices.
How is Generative AI Helpful to Consumers?
Shoppers were once provided a “one-size-fits-all” experience, with little personalization or flexibility to match individual preferences. With the help of generative AI, everything can feel custom. The devil is in the details when there is so much competition, and gen AI can offer the personalization and inspiration needed to make a brand stand out.
Easy Personalization
For consumers, generative AI makes it easier to discover new products that they may enjoy. You may notice that your favorite store knows just the right thing to suggest to bump you over that free shipping threshold. Armed with the information from browsing history, generative AI can tailor the experiences to individual preferences in real-time.
Many apparel sites have implemented this technology to auto select your personal size, so all there’s left for you to do is hit Add to Cart. By reducing friction in the buying process, customers are more likely to finish the transaction.
Giving Customers Inspiration
Can’t make a decision? Generative AI is here to help. By analyzing your preferences and behavior in real-time, sites can serve up personalized inspiration when you need it most. Companies are leveraging AI-powered plug-ins that curate outfits, mood boards or simple add-ons based on what you’ve been browsing. These suggestions and recommendations can prevent decision fatigue and even introduce new ideas. This purchase inspiration builds consumer confidence. It may also serve as a loyalty driver because it creates the appearance that everything they need can be found in one place.
Gen AI Use Cases in the Retail Industry
While much of this technology is not novel, the application of it in a retail setting is. Generative AI is changing how companies allot their time, spending less human capital on the mundane and more on strategy, fun and customer experience. As the economic situation shifts, it’ll become more important that businesses use gen AI to fill in the gaps, whether that be in the organization or in the customer experience.
The retail industry will continue to fight for consumer buy in with this new technology. By implementing generative AI with thoughtful care, brands can differentiate themselves. Success will come to those who use the tool to create more ease and connection. The possibilities are expansive, but like always, the winners will be those who use the technology to deliver genuine value.