Artificial Intelligence is changing the retail landscape as we know it. Nearly every business has had an internal discussion about cognitive computing and AI, but we are now seeing this technology come to fruition. AI provides retailers an opportunity to better understand, connect with, and create superior experiences for consumers in a way that has never before been possible. The capabilities of machine learning are immense; it can understand and interpret customer preferences, manage inventory, unlock valuable data in real time, and so much more. With such potential, retailers are taking notice. According to Gartner, 85% of customer interactions in retail will be managed by artificial intelligence by 2020. For retail companies that want to compete and differentiate themselves from competitors, AI holds a promising future. Here are just a few ways retailers are taking advantage of artificial intelligence in store.
Arguably the most important reason to invest in AI systems is to better understand consumer needs. Retailers have an incredible amount of data at their fingertips. AI can interpret this data, offer insights, and provide direction for retailers. Understanding factors like social profiles, movement, weather, and behavior, AI can help retailers understand their consumers’ wants and needs at an individual level. This then allows them to tailor their products, services, and shopping experiences around these unique needs.
One of the biggest challenges faced by retailers is managing inventory levels. Ordering too much inventory can be just as detrimental as running out of inventory, so retailers are constantly trying to uncover that sweet spot where stock meets (but does not exceed) consumer needs. Artificial Intelligence can assist in this process by monitoring weather patterns, consumer behavior, and purchasing rates so retailers can make informed decisions as it relates to supply chain management.
New Store Optimization
When it comes time to open a store, retailers must determine the best location – a decision that carries serious weight. Depending on the size and format of the store, location alone could be responsible for revenues of several million. Artificial Intelligence is being used to assist in these logistical decisions. This technology takes into account a number of data factors, such as past sales, demographics, distance from competitors, and even weather patterns to determine where and when to open a store. Because AI systems learn from this data, it is capable of more than just creating a list of best locations. It can provide retailers with an understanding of the most important variables contributing to new store success.
From improving the consumer shopping experience to developing improved management strategies, artificial intelligence holds a promising future for the retail industry. The possibilities are endless!