Blog post

7 AI Trends in Retail

Changing how we search, discover and shop, digitalization is transforming the retail landscape. Although there’s still a place for brick and mortar stores, e-commerce has brought fierce competition, along with new standards of customer expectations. To strive ahead of new entrants and keep up with a full digital transformation, retailers can employ new technologies, more specifically artificial intelligence in retail, to maintain relevancy in a crowded market. 

Tackling many retail challenges head on, AI can be used to personalize shopping experiences, optimize the supply chain and increase conversion through large amounts of customer data. AI is also helping more traditional brands remain competitive and allowing physical stores gain an advantage. So what popular applications of AI are we seeing in retail and what are the benefits of artificial intelligence in the retail industry? Let’s look at 7 trends making an impact across the retail industry. 

New format retail 

1. Micro-fulfillment centers 

Given that fast delivery is vital for any e-commerce strategy, micro-fulfilment centers are proving effective. Micro-fulfilment centers are small-scale warehouses, generally located in urban areas near the end consumer. Not only do these centers hold more than regular supermarkets, but they can also be 94% smaller than a traditional warehouse. Within these vertically stacked centers, AI is implemented to advise the best location for goods on the shelves. It’s also used to prioritize tasks and navigate ground robots to collect and organize goods. Israel’s Rami Levy, America’s Walmart and UK’s Ocado, are all retailers who are implementing micro-fulfillment centers globally.  

2. Amazon’s Grab and Go 

Many are aware of Amazon’s recent attempt to shake up the retail space with its Grab and Go convenience store. The bold move is heralding a new way for retail with no cash or cashier. This concept uses AI, but not in the most obvious way. Instead of facial recognition (due to privacy concerns), computer vision is used to pick up a shopper’s physical presence. Tracking their every move, computer vision also identifies items removed from the shelf. By sending all this data to a centralized system, Amazon can then charge people accordingly as they exit the store. But is this concept a novelty or an actual transformation for in-store retail? Well for some it may feel like a gimmick, however CB Insights identifies over 150 companies working to transform brick-and-mortar stores to a human-free environment with the help of computer vision and automation.  

Search and discovery  

3. Neiman Marcus’s image recognition app 

AI is supporting search and discovery in a saturated retail landscape. Retail stores are using image recognition to make it easier for customers to acquire items for which they are searching. Neiman Marcus’s Snap. Find. Shop. app allows customers to quickly browse inventory in search of the same or similar products. Similarly, Target has used this approach via a partnership with Pinterest. Using Pinterest Lens, customers upload an image of any product and are presented recommended products that are similar and available at Target.

Both these approaches use machine learning to identify similarities in items, whether it’s the subject of an image or the visual patterns that match the likes of other images. And for Target, partnering with a leading company in visual search was a forward-thinking move, not only saving an enormous amount of time but also capitalizing on the influence of social media in consumer decision-making. 

The AI stylist 

4. Expert advice online 

Although e-commerce has boomed in the past decade, customers still value brick-and-mortar stores where they can touch an item and try on different sizes before purchasing. North Face is aiming to bridge the gap between the physical and online store with its Expert Personal Shopper. The app mimics a retail expert, helping customers navigate the e-commerce store while receiving advice similarly to an in-store experience. For online shoppers, extra support and further guidance is maybe what’s needed with nearly 70 percent of shopping carts being abandoned before purchase is completed.

5. Fitting rooms of the future 

Tech is vamping up the traditional fitting room with a more exciting, streamlined experience for shoppers. Instead of waving down an employee or venturing out of a cubicle in an uncomfortable item, American Eagle customers can ask for alternative sizing directly to the room. As well as these requests, customers use AI enabled touch screens to receive personalized product recommendations based on the items they’ve selected.

On the flip side, virtual fitting rooms are another application of artificial intelligence in retail for online retailers. Brought into use more quickly due to the pandemic, virtual fitting rooms have become the fitting room of choice for many men and women around the world. Without having to leave their couch, virtual fitting rooms, enabled and enhanced by AI technology can mimic the real-world experience, allowing consumers to make more satisfactory purchases through websites. Augmented reality is also being applied to enhance the online shopping experience, helping to give customers the sense that they can touch and feel the products before buying, which especially helps in large purchases, such as furniture and home appliances.

Not your regular Bot 

6. H&M integrate bot into popular messaging app 

As the modern-day consumer seeks to connect with brands wherever they are, through channels such as email, social media or online forums, brands need to be sure they are available on all those channels. Fashion brand H&M launched a chatbot within the trending message app Kik – a popular app in the States, used by 40% of American teenagers. The bot is not your regular AI-powered communication tool. Customers can buy items directly, and can also receive styling tips after the bot learns what the user likes.

Chatbots are an ideal addition to any retailers´ customer support team, as they are available 24/7, and can handle low level queries from customers, freeing up human customer service agents to take care of higher value tasks.

7. Macy’s enhance the in-store experience with AI 

Ever walked into a department store and felt overwhelmed by the sheer number of products on display? Macy’s On Call app saves customers from a daunting shopping experience. After entering a store, users open the app and begin chatting with an AI bot. It’s not the everyday bot experience to receive directions to a specific in-store item. The bot can also check whether an item is in stock and alert a human employee if it senses the customer becoming frustrated. Here, the bot uses sentiment analysis, the process of understanding and categorizing opinions expressed through language (text and voice), to read the customer’s emotion. This tool is one of the most valuable AI solutions for brands and proven extremely powerful, allowing for real-time monitoring about what people are thinking or feeling.  

Customer Insights, Revamped

8. Impressive insights into consumer behavior

One of the main strengths of artificial intelligence is its ability to sort, analyze and extract meaningful insights from large amounts of data. This can be applied in the retail industry to get insights on a whole new level. Machine learning algorithms can analyze years of historical data to make predictions and sales forecasts for the upcoming year, which are especially useful at busy times of the year, such as Black Friday and at Christmas. Better, and more accurate sales forecasts lead to more cost-efficient operations.

Another application of advanced consumer insights is for online retail stores. By using artificial intelligence to understand now only what people are buying, but also a little bit of why they might be purchasing the items can help stores identify what they may purchase next. This can be used in the form of product recommendations that are personalized and actually appeal to each individual buyer. Accurate product recommendations leads to better buyer satisfaction, increased cart size and an overall impressive online shopping experience.

The retail landscape is quickly changing. From new ways to find value in the supply chain to evolving customer expectations, it is becoming imperative for companies in retail to rethink the value that artificial intelligence can bring to their operations.

And as new ways of shopping continue to evolve, AI will be crucial for traditional retailers to provide exceptional value. AI in retail is mature; and thanks to the abundance of use cases, retailers have plenty of inspiration so they too can apply AI to their businesses and yield strong returns on investment.  


Leave a comment

Your email address will not be published. Required fields are marked *

Terms of Use agreement

When contributing, do not post any material that contains:

  • hate speech
  • profanity, obscenity or vulgarity
  • comments that could be considered prejudicial, racist or inflammatory
  • nudity or offensive imagery (including, but not limited to, in profile pictures)
  • defamation to a person or people
  • name calling and/or personal attacks
  • comments whose main purpose are commercial in nature and/or to sell a product
  • comments that infringe on copyright or another person’s intellectual property
  • spam comments from individuals or groups, such as the same comment posted repeatedly on a profile
  • personal information about you or another individual (including identifying information, email addresses, phone numbers or private addresses)
  • false representation of another individual, organisation, government or entity
  • promotion of a product, business, company or organisation

We retain the right to remove any content that does not comply with these guidelines or we deem inappropriate.
Repeated violations may cause the author to be blocked from our channels.

Thank you for your comment!

Please allow several working hours for the comment to be moderated before it is published.

You may also like