Blog post

Why AI is Essential to Retailers on Black Friday and Cyber Monday

How AI is Being Used in Successful Retail Strategies Around the World

The weekend of Black Friday and Cyber Monday represents the start of the holiday shopping season and one major thing to both customers and retailers: opportunity. Opportunity for the customer to score huge deals and savings. And opportunity for retailers to close a high volume of sales, much more than any other weekend of the year.

As a retailer, there is a lot at stake. In 2019, online shopping sales for Black Friday reached $7.4 billion and Cyber Monday reached $9.2 billion. In 2020, the number is likely to be even higher. Although the global pandemic continues to alter many aspects of our lives, there is one thing it hasn’t changed – consumers’ appetite for a good deal. The difference in 2020 is that ecommerce is predicted to make up a larger share of overall sales than ever before, as consumers shift much of their shopping activity online. 

How AI is changing the retail industry

With this shift to ecommerce, it’s only natural that retailers will begin to incorporate more technology into their daily operations, and AI and machine learning tools are included in that new technology. It has been reported that global spending on IT within the retail industry in 2019 surpassed US$196 billion and it is projected to grow to US$225 billion by 2022. 

With this investment, AI is changing the retail industry in many ways, including these two big ones:

  1. AI is enabling extremely customized shopping experiences, allowing retailers to focus on delighting the customer. 
  2. AI and machine learning is streamlining backend operations, speeding up production and improving efficiency along the whole retail supply chain. 

How AI can save the retail industry

In recent years, there has been a lot of talk about the death of retail, or at least the death of brick and mortar stores. Surely, as the ecommerce market grows, retailers should consider at least an omnichannel approach to compete with retailers who operate more efficiently online. 

However, this doesn’t mean that brick and mortar will become obsolete, and AI and machine learning can help save the retail industry in that way. There are many products that consumers will still want to see and touch in person, and actual experience of shopping will continue to be a draw for many customers. The key then, will be for retailers to use AI, machine learning and other technology to enhance the in-person customer experience and to cut costs within operations. 

Benefits of using AI in retail

During this extremely important period, retailers need to employ as many strategies as they can to ensure success. Artificial intelligence (AI) is playing a pivotal role in helping them do this.

Let’s take a closer look at some of the benefits of using AI in retail. 

AI’s role in customer experience

Creating an extremely personalized retail experience. 

Powered by customer data and machine learning algorithms, AI is able to process relevant information and turn it into a tailored shopping experience for each individual customer. This tailored shopping experience includes specific product recommendations (leading to increased shopping cart spend), enhanced site layout (making it easier for customers to find what they want), and knowing how to get customers to the checkout page quickly. 

Retailers who focus on personalizing the shopping experience will likely see an increase in sales as a result. According to research by McKinsey, personalization can lift sales by 10% or more and deliver a much higher ROI for marketing efforts.  

As an example of AI successfully being used in retail, H&M in China consistently faces a large amount of competition for sales and needs a key differentiator. By creating a virtual personal stylist using AI and customer data, the brand was able to make personal recommendations tailored to each customer’s preferences and choices in a unique way. 

Looking at the bigger picture, data is the key to understanding the customer. AI can help companies understand the customer journey. AI allows retailers to analyze large volumes of customer data, learning what makes them want to come back, how they make buying decisions and what motivates them to buy more. Understanding the customer also allows for retail brands to connect with them on a more personal level, increasing brand loyalty and repeat customers.

When retailers understand how customers behave throughout the year, it becomes easier to forecast sales and understand motivations to buy on Black Friday and Cyber Monday. 

Clothing brand Mango recently partnered with telecommunications company Vodafone to create a personalized shopping experience by enhancing regular fitting rooms with a digital mirror that uses the data capabilities of AI. These “digital fitting rooms” which were first rolled out in Lisbon, enhance the traditional retail experience of trying on clothes with digital suggestions for additional related items and the ability to make a digital request for variations such as another size or color without leaving the fitting room.

Handling customer service inquiries quickly and easily.

AI powers chatbots, which, with quality data and programming can be a powerful tool for managing customer service queries effectively. On Black Friday and Cyber Monday, retailers will undoubtedly receive a very large amount of questions from customers. Some of these queries will be complex issues, but some will be easily solved by providing standard information and answering frequently asked questions in a smart way.  

To deploy a chatbot effectively, retailers should identify the queries that chatbots are the best at answering. These are usually standard questions such as shipping information, sizing guides and return policies. By fielding these queries, chatbots free up customer service agents to handle the more complex issues. 

AI also allows customers to ask questions and interact at their own convenience. So when a customer is shopping online at 2am and suddenly has a question, the chatbot will be there to give them an answer when a human wouldn’t be. That could be the difference between receiving a late night order, or missing out on the sale altogether.

AI’s role in operations

Logistics and operations on the backend is another large consideration as retailers plan for a successful Black Friday and Cyber Monday. This includes adequately managing supply chain, inventory and distribution and preparing to manage a high volume of orders. Making accurate forecasts for the weekend through to the end of the year will help ensure smooth operations even as orders increase. AI can play a key support role in these areas as well. 


Using predictive analytics and historical data, AI creates forecasts for sales, returns and other customer behaviour for any given timeframe. With enough data, AI generates detailed forecasts which can help retailers accurately predict demand, leading to lower operational costs and more effective inventory management. AI can accurately predict not only the volume of overall orders, but individual products that will likely be in higher demand than others. Additionally, AI forecasts are less likely to be affected by human error.

For omnichannel brands, AI forecasting can take insights a step further. AI can predict what products will sell better online versus in the store, allowing retailers to plan sales and inventory allotment accurately between channels. 

Managing a high volume of orders

With a high volume of orders comes the inevitable work behind the scenes of managing inventory and ensuring that your supply chain can ramp up production to fulfill those orders. AI can manage the vast amount of data that comes in, helping to ensure that no detail is overlooked and that orders are processed quickly and effectively.  

Efficient order management  is even more essential for omnichannel brands, as they will be managing online orders and real-time purchases of people in stores. 

AI as a requirement, not an option

Black Friday and Cyber Monday present a major sales opportunity for retailers, but during this weekend, there is also tough competition amongst retailers. The use of AI to improve operations and customer experience is not only a competitive advantage but critical to a successful retail strategy for the long weekend and beyond.

Find out more about DefinedCrowd and how high-quality training data is the key building block to find success in AI as a retailer.


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