Artificial Intelligence (AI) has taken its course of time to improve business processes to a great extent. The retail industry is rapidly utilizing the power of AI. Retailers today are using AI as a tool to eliminate or reduce lot of manual activities in areas such as promotions, assortments and supply chain. Major retailers are experimenting with AI, machine learning and robotics in major parts of value chain nowadays.
Digital retailers or e-tailers/eCommerce companies are benefited significantly because they are using AI to predict trends, optimize warehousing and logistics, setting prices and personalizing promotions.
The many benefits of AI in retail:
With introduction of the AI, retailers can benefit in a number of ways listed below:
- It will help people in making a smarter decision, with more accurate and real time forecasting.
- Using AI, operations can be more efficient. It is all because of robotics and process optimization that helps in enhancing productivity and minimize manual labor costs.
- Utilizing the power of AI can help the retailers increase both the number of customers and average amount spent by them by creating personal and convenient shopping experiences.
The future of retail utilizing the AI is helpful for the retailers as they will know what customers want before even the customer knowing the same with the help of forecasting and real time, automated decision making. The large volumes of data will be generated and analyzed, the retailers will be able to identify the patterns from this data spanning many disparate sources – previous purchases, social media trends, weather forecasts, online viewing history, facial expressions analysis and what not.
The retailers will also be able to predict their future store performance. This will be of significance when they will be expanding their physical footprints. Due to the advent of digital stores, more sales per square meter of physical space are declining. To keep the costs low, it has become crucial for the retailers to optimize store space and location.
By improving the AI enabled forecasting, an European retailer was able to improve its earnings before Interest and Taxes (EBIT) by 1 to 2 percent by using a machine learning algorithm to anticipate the fruits and vegetables sales. This way, company orders the materials based on the forecasting algorithm to maximize the turnover and minimize waste.
Automation and Retail Operations:
Operations like Warehousing and other store operations provide a rich array of optimization opportunities for the application of artificial intelligence. For some of the retailers which are non digital in nature, notably the supermarkets, AI automation would make an existential difference. Many of these supermarkets offer home delivery and online sales to match their competition in the online domain but they have to still carry the full cost of the physical stores.
Autonomous robots can work well alongside people to increase productivity and moreover, reduce the injuries. In store, machine learning can help optimize merchandising, with opportunities to improve assortment efficiency by 50 percent.
Retailers are personalizing the shopping experience:
Consumers are now empowered by ease, economy and immediacy of online shopping so they expect highly personalized, immediate, pitch perfect help. However, the AI will be invaluable to marketers who are trying to reach hyper connected consumers who continuously redefine value by comparing prices online. AI can help optimize and tailor to each shopper, in real time, the smart phone penetration that necessitates an Omni-channel strategy. The sales can be increased by over 1 to 5 percent by following insights based selling, including personalized promotions, optimized assortment and tailored displays. This kind of personalization, online, along with dynamic pricing can lead to 30 percent growth in sales.
With the help of data gathered online, the pure internet players are several steps ahead in targeted marketing. Traditional retailers have to gain access to data assets to compete with the online counterparts.
Another advantage would be that the User Experience would be enhanced to a great extent. Deep learning and computer vision technologies will help the store owners compete with one click convenience of online retailers as the checkout process would be eliminated completely. An example would be Amazon Go an experimental grocery in Seattle allows shoppers to take goods off shelves with stopping at a cashier or checkout kiosk. This is achieved by allowing a computer vision to identify the customers as they enter the store, link them with the products they have picked up from the shelves. The cost of the items is then deducted from their Amazon accounts and sends an email receipt.
In the future it will also be possible for the products to be delivered at homes of the consumers within minutes of purchase by using artificial intelligence technologies. Most of the big players are making this effort possible with the help of unpiloted aerial drones. The drones and robots are built with focus on application of deep learning technology to allow innovative problem solving and decision making.
Gaining that extra edge:
Competing in this new realm of retailing will be hard. The retailers will have to invest in data gathering both up and down their supply chain to get an extra edge, to seek a competitive advantage. This will involve improvement in partnership between retailers and their suppliers to improve supply chains and marketing optimize pricing and achieve efficient merchandising.
Also, cross industry partnerships between retailers and other players will also evolve to create better customer insights. Computer vision technology in physical stores can be effectively utilized to give a tremendous insight through customer footfall data, customer reactions and promotions as well. Natural language processing and deep machine learning will further facilitate the rise of virtual assistants by making dialogue more intuitive and improving it faster.
Virtual assistants vs. retailers
The rise of virtual assistants will lead to disintermediation of the retailers. As the human interaction will increasingly be reserved for higher engagement types which will involve emotional intelligence, excellent product knowledge and brand championship? , the retailers will need to rethink the skills of their sales teams.
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