Why More Retailers Are Making Use of AI Technology
Artificial intelligence (AI) continues to grow rapidly as it is applied across sectors, from healthcare to online banking. Retail is one such industry where intelligent automation is entering new phases of advancement. In fact, growth in the global AI market for retail is forecast to reach $23 billion in the next seven years, with AI-based automation expected to reach 80% of retailers in 2021 alone.
The demand for this technology continues to soar as the need for more efficient supply chain management and operational agility has been accelerated by challenges brought about by the pandemic. As more retailers use AI technology, consumers’ expectations and behaviors also change. Therefore, understanding why and how AI continues to benefit both retailers and shoppers is essential.
The Growth of AI in Retail
Despite having to close their doors to physical shopping due to the pandemic, retailers have found new ways of reaching consumers through digital spaces. These new approaches created the need for analytics professionals to help retailers navigate this landscape. The analytics technology and solutions market is expected to be worth $274.3 billion in 2022, and remote learning at a higher education level has stepped in to meet the increasing need for professionals competent in these areas. Universities today offer online degrees in data analytics to make training more accessible. Not unlike traditional programs, these online degrees teach professionals to draw useful insights from data, visualize information for business decision-making, and forecast predictions for market trends. These same insights are then used to create smarter tools and AI-capable programs that can serve the consumer and boost sales.
Leaders in the retail industry are depending on this new wave of data specialists to make sense of data sources, such as demographics and transaction history, to help them gain a deeper understanding of consumer behavior. The guidance of these data experts is especially valuable when using AI applications, as they are trained to see how information moves through the system so they can identify pain points and eliminate them. With more data analytics professionals to bolster the retail industry, retailers can deliver services more efficiently to their customers for the most value-adding experience.
The Benefits of AI in Retail
The growing use of AI technology in retail has proven beneficial in many ways. First, it allows brands to meet the demand for personalized shopping. Data analysts are essential here, as they organize and analyze data to draw insights and make recommendations. For instance, AI tools can be configured to use information such as clicks, search queries, and purchase histories to make suitable suggestions for additional purchases that make sense to the buyer. Data analysts can even apply predictive modeling to determine how a retailer’s products will sell based on current customer behaviors. The result is an increased likelihood of shoppers buying more items from the brand as they enjoy a shopping experience that seems to intuitively know what they want – a win-win.
Retailers can also leverage AI technology with the help of data professionals to organize information across various products, brands, and product types – a task that would otherwise require hours of manual work. For instance, different brands may carry similar products with inconsistent descriptions for the same attributes, which is often the case with clothes and electronics. Here, analysts can use database principles with AI algorithms that can identify and categorize similar attributes for better search and filter functions. This gives retailers solutions that can simplify their catalogs while improving the customer’s experience of finding products.
Benefits of AI in Retail
AI can also improve marketing and merchandising planning. Walmart uses this technology to digitize its physical stores, allowing them to manage everything in real-time. Cameras and sensors can keep track of restocking frequency and even determine how ripe fruits are based on their color. Mobile notifications are then sent to workers so they can be replaced. As a result of these tracking techniques, AI can use data to produce insights such as which products are in high demand to inform inventory needs. These insights can also apply to marketing efforts as stores can segment customers and execute targeted advertising strategies to maximize their product offerings.
As technology improves, industries like retail are seeing more rigorous competitors emerge in the market. Staying ahead of the game with conversational AI and other similar technologies can give retailers a competitive edge as they offer better customer experiences.