AI in Retail

The market size of artificial intelligence (AI) for the retail industry is projected to surpass £14bn by 2027 (source). Plus, adoption of AI solutions is on the rise - at the moment over 28% of retailers are already deploying Artificial Intelligence/Machine Learning solutions. This is a huge increase, considering that in 2016, only 4% of retailers were in this position. 

So why is AI important for the retail industry? AI helps retailers to streamline their business operations and gain competitive advantage. For instance, it helps retailers create data models such as those related to consumer behaviour, enabling them to improve retail forecasting and to make data-driven decisions. Increased investment in AI for retail demonstrates how crucial this technology is for the industry. We’ve outlined below some of the use cases for AI in retail. 

Virtual AI

More and more companies are embarking on digital transformation projects. Consumers now expect a shopping experience that is personalised. Virtual assistance, provided by AI can be used not only online but in store, helping to guide customers through the buying journey. 

Some retail brands are striving to offer their customers a personalised experience. For example, some retailers are using a digital kiosk or interactive digital signage that can show customers a wide range of product information in real time, including items or options that might not be on the shelves. For retailers, this is a great opportunity to utilise AI to suggest similar or related products, even if they're only available online. For instance, if the customer is looking at dining room furniture, you could suggest similar auxiliary homeware products or additional services. As digital transformation accelerates in the retail industry, it will be vital to bring together the best of online and physical shopping for your customers. Virtual retail assistant technology, powered by AI, is a solution that is seeing increased investment across the industry. 

Computer Vision Technology

The computer vision segment of the technology industry is predicted to massively expand through 2027. AI-based computer vision technology uses a computer camera to provide various analytics solutions such as monitoring the retail supply chain and in-store activities. Many retailers use this technology across their operations, from analysing customer interaction, product on-shelf availability, footfall traffic, and even detecting liquid spills. The best computer vision solutions will be enabled for integration and ease of use. Once in place, these solutions can help guide investment decisions and assess and monitor store performance. 

Data Analysis Application 

Retailers are increasingly using AI for use in marketing applications, with many companies using AI-based solutions to gather information related to customer experience. Such data helps retailers with strategic planning including implementation of marketing activities, resource scheduling, demand forecasting, and financial planning. As more retailers adopt AI for help with data analysis, the market will see an increased reliance on such solutions, therefore encouraging even more retailers to adopt AI. 

The types of retailers with the highest adoption of AI are food, grocery, department, apparel and footwear stores. There are many real-world use cases for AI in such retailers. 74% of AI solutions in retail are used behind the scenes, with 26% of solutions for direct interaction with customers. It is evident therefore that the majority of AI solutions are used for operational tasks, but it is predicted that these figures will change as AI technology continues to evolve. 

Scaling AI

According to recent Statista research approx 50% of respondents from the consumer goods and retail industry stated that deployment of artificial intelligence can help improve customer service. Additionally, 47% of respondents said that AI can greatly enhance inventory management by helping to effectively manage costs and buyers' needs. Furthermore, according to a retail executives survey on AI by Capgemini, the application of this technology in retail could save up to $340 billion each year for the industry. 

It is clear that there are numerous applications for artificial intelligence technology in the retail industry. It’s important that organisations implement a holistic view of AI in order to successfully scale their AI and digital transformation programmes. Successful organisations will ensure to align their strategy, adjust their processes, develop governance models, and establish a talent base that together serve as strong building blocks for scaling AI. It is clear that AI has lived up to its promise of providing real business benefits, so it is evident that is the responsibility of the organisation to unleash its full potential.

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