How AI will Change the Retail Industry

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AI (artificial intelligence) is transforming the retail industry. It is estimated that by 2025 the size of the AI software and systems industry is expected to reach US$35,870 million. AI will change the entire product and services cycle from manufacturing to post-sale customer communications. Both shoppers and retailers will benefit from this innovative, always learning technology.

The gradual shift of spending power to millennials has accelerated the growth of AI in the retail industry. This group of consumers prefers self-service when available and like to remain in control of online purchasing and other habits. In fact, studies have shown that 64% of millennials prefer self-service. Whether they’re on an ecommerce site or using an app on their smartphone to help them shop, shoppers can easily access and use technology the moment they begin shopping. AI leverages that technology so that retailers can use it to their advantage.

AI and machine learning allow retailers to provide a better experience for the consumer by personalizing each interaction in ways that human employees cannot replicate. People have come to expect and prefer a personalized experience from retailers. Increases in conversions, revenue and engagement can all be achieved by retail marketers who personalize the consumer experience.

Here are just some of the ways AI is having a positive effect on the retail industry:

No More Trying on Clothes
Shopping for clothes can be a time-consuming chore. AI hopes to change this by introducing in-store gesture walls that make shopping less about searching and more about finding. Touchless computer monitors will allow customers to find the perfect black shoes or dress with the wave of a hand instead of shifting through racks of clothes. It can even make product recommendations such as what belt to wear with a favorite pair of pants. Customers are currently limited to the number of products in the physical space of a store draped on mannequins or placed on shelves. With AI, they will be able to build an infinite number of looks they’ve put together themselves. Gesture control will help stores collect data such as product views, popularity, awareness as well as offering shoppers a fun, interactive experience.


Virtual Mirrors Make Decision Making Easier
Virtual mirrors allow customers to try on clothes without actually getting undressed. A life-size mirror overlays an image of the buyer with pictures of selected clothing and accessories. Gesture and touch-based interfaces allow them to mix and match to find the perfect outfit. Cosmetic companies are also using this technology to show shoppers how different eye shadows, lipstick and foundation shades look without actually applying them.


Robots Replace People
We’ve all heard about robots being used for assembly, packing and shipping but they are now starting to make their way to the front of the store and interacting with customers. Robots reduce labour costs while improving visibility, service levels and overall customer satisfaction. Customers can interact with robots using touch screens or by speaking with them. They can help locate items and answer basic customer service questions. They can also go around the store and perform real time inventory tracking. Unlike human beings, AI customer service bots can provide unbiased customer service and work around the clock. This technology also frees up customer service representatives to handle more important or advanced tasks.


Video Analytics
Major advances in computer vision technology allow retailers to improve safety, customer service and compliance with employee procedures. Retailers need a way to study customer behavior in store the same way they use behavior analytics from online shopping. In person shoppers need to be better understood. Data from retail surveillance can help determine customers’ engagement, exposure level and navigational route through the store. This can then be used to keep customers in store longer by improving store layout. Video analytics can also be used to better monitor security to avoid theft by customers or employees though the use of monitored integrated video surveillance. Surveillance images can be analyzed in real time to alert management to things that need immediate attention, providing an extra layer of protection.


The Immediacy of Chatbots
The advantage of chatbots is that they provide speed and intimacy. Rather than waiting for a salesperson to help you, you can simply use a messaging app on your smartphone to have your question answered. Chatbots can handle potentially thousands of customer inquiries simultaneously. Chatbots don’t take up space on a smartphone, they speed up interactions and eliminate the wait time for a live agent. Furthermore, if a chatbot can’t answer a question they can automatically put you through to a live agent. This ensures the customer never walks away without a resolution.

These are just some of the ways AI is transforming the retail industry. In the future, innovators will continue to develop ways for AI to make the customer shopping experience more enjoyable and streamline the business processes that have handcuffed the retail industry for decades. Just as AI transformed ecommerce and online shopping, it is sure to have the same transformative effect on brick and mortar shopping.

Anne Stephenson
Partner, Explorer Research

anne stephenson

Retail