AI in Retail, Reshaping the future

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AI in Retail Changing Commerce in the Digital
World
The influence of AI within the retail sector is
profound and far-reaching. Now, it's not just
about recommending products based on your
shopping history or preferences. Rather, it's a
complete mindset shift that's changing the very
essence of how we shop and how retailers do
business. Personalized recommendations are just
the tip of the iceberg here when we discuss AI in
retail. Today, AI is being harnessed for tasks as
diverse as managing inventory to predicting
future sales trends for specific products and
brands, enhancing both the customer experience
and operational efficiency and delivery of
lasting value. This blog post offers an
exploration of AI's role (along with other
emerging/promising technologies) within the
retail landscape. We'll start by tracing the
historical trajectory of AI in retail, providing
a clear context for its current applications and
potential future developments. We'll also examine
real-world applications of AI in retail. From
chatbots handling customer inquiries to smart
mirrors that let you virtually try on clothes,
these tangible examples provide a vivid picture
of how AI is already transforming the shopping
experience. So, without wasting any more time,
let's get into it by understanding how AI works
in retail.
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How AI Works in Retail?
AI in retail involves using advanced technologies
to analyze an ocean of data, everything from
customer shopping habits to market trends and
product details. This data analysis isn't just
for show. Instead, it serves several critical
functions in today's retail landscape. AI can
predict what customers might want to buy next. By
studying their purchase history and behavior, AI
systems can make educated guesses about what
products might catch a customer's eye. It also
helps retailers price their products just right,
convenient to the pockets of consumers. By
studying market trends, competitor pricing, and
historical sales data, AI can suggest the most
effective price points for products. This ensures
retailers get a fair profit while customers get
good deals that too with tailored market
campaigns (also powered by AI). AI can also be
used to manage and govern the supply chain and
inventory to overcome understocking or
overstocking options. It plays a crucial role in
enhancing security, detecting fraudulent
activity, strengthening security measures, and
protecting both retailers and customers. So, you
see, AI is not just changing retail but
revolutionizing it. And as technology continues
to evolve, its impact is only set to increase
with time. Recent news indicates that leading
retailers are already harnessing AI to great
effect. Levi Strauss Co., for example, has
announced a collaboration with custom AI
solutions (source NRF). Meanwhile, companies
like Lowes and Walgreens are using AI to enhance
their customer experiences, as reported by Forbes.
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The History of AI in Retail
Artificial Intelligence (AI) in retail is not a
recent phenomenon. Its roots can be traced back
to the 1980s and 90s when computer systems began
to assist in inventory management and
point-of-sale transactions. Ok, I get it there
are obvious questions regarding if AI even
existed back then? The first significant use of
technology in retail was in the form of barcoding
systems introduced in the 1970s and 1980s. This
technology simplified inventory tracking and made
checkout processes faster and more efficient. It
was a game-changer for the industry, paving the
way for more advanced technologies. In the 1990s,
data mining techniques began to emerge, allowing
retailers to analyze customer purchasing patterns
and market trends. This was a critical step
forward, as it enabled retailers to understand
their customers' needs better and tailor their
offerings accordingly. The early 2000s saw the
advent of e-commerce, which brought with it new
opportunities for using AI. Recommendation
engines, which suggest products based on a
customer's browsing history and previous
purchases, became commonplace on e-commerce
platforms. Amazon and other such retail and
ecommerce giants, for example, pioneered this
technique, resulting in a significant boost in
sales. Today, AI is used not just for product
recommendations and pricing strategies but also
for personalized marketing, customer service,
supply chain management, and even in-store
experiences.
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According to a report by Capgemini, three out of
four retailers are currently investing in AI
technologies, and those investments are expected
to save the retail industry 340 billion annually
by 2022. Technologies Used in AI for Retail

• Artificial Intelligence (AI) in retail is a broad
  field, encompassing several key technologies that
  work together to revolutionize the shopping
  experience.
• However, here are the top technologies that are
  often the backbone of any customized engine built
  for retail use cases.
• Machine Learning
• ML is a subset of AI and is a game-changer in
  this space. ML algorithms analyze vast amounts of
  data and learning patterns and predict future
  trends with minimal human intervention.
• For instance, ML powers recommendation systems,
  predicting what products customers may be
  interested in based on their past purchases.
• In fact, according to a report by McKinsey, 35
  of what consumers purchase on Amazon comes from
  product recommendations based on such algorithms.
• Deep Learning
• Deep Learning, a more complex form of ML, uses
  artificial neural networks to simulate human
  decision-making.
• Retailers use deep learning for various use
  cases, such as image recognition a solution
  that allows customers to search for products
  using images.

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• For example, Pinterest uses deep learning for its
  visual search tool, which lets users find similar
  items or products using photos.
• Natural Language Processing
• Natural Language Processing, or NLP, is another
  critical technology in AI for retail and is
  employed in multiple departments.
• NLP enables computers to understand and respond
  to human language, signage, and multiple other
  inputs, making it the backbone of customer
  service chatbots.
• According to a study by Juniper Research,
  chatbots are expected to bring cost savings of
  over 8 billion annually by 2022, up from 20
  million in 2017.
• Examples of AI in Retail Top Retail Solutions

• Artificial Intelligence (AI) is rapidly
  transforming the retail landscape, offering
  groundbreaking solutions that enhance customer
  experiences and streamline business processes.
• As a retailer, it's crucial to stay informed
  about these AI developments, understand their
  potential benefits, and employ where feasible.
• Here are some top examples of AI in retail.
• Amazon
• Consider Amazon, a leading player in the retail
  industry that has now penetrated a large
  ecommerce market and is known to be among the
  giants of the modern retail industry.
• They leverage AI to offer personalized product
  recommendations to their customers, analyzing
  individual browsing history, past purchases, and
  products viewed by similar customers.
• According to McKinsey, this strategy has proven
  incredibly successful, with a staggering 35 of
  Amazon's sales coming from these recommendations.

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• HM and Sephora
• Another impressive application of AI in retail is
  the use of chatbotsand leading fashion brands,
  including HM and Sephora, are using the
  technology to lead in the retail sector.
• These virtual assistants, powered by Natural
  Language Processing, can handle a wide range of
  customer service tasks, including answering
  queries and assisting with purchases.
• This not only enhances the shopping experience
  but also significantly reduces the load on
  customer service teams.
• Walmart
• AI is also making significant strides in
  inventory managementsolving the problems of
  over- ordering, understocking, and more.
• Walmart, for instance, uses AI-powered drones to
  scan warehouse inventory, a task that would
  traditionally take humans about a month to
  complete.
• The drones can do it in a single day, thus
  improving efficiency and accuracy. Moreover, this
  leads to better collection and storage of data,
  which makes it easier to analyze later on.
• So, the question is not if but how your
  organization will leverage AI to enhance your
  retail business.
• Will it be through personalized recommendations,
  customer service chatbots, or AI-powered
  inventory management? Or perhaps a combination of
  these? The choice is yours.
• Conclusion Is AI the Future of Retail?
• All the examples and use cases that we've
  discussed above, including personalized
  recommendations and chatbot customer service to
  AI-powered inventory management, tell us one
  thing artificial intelligence in retail is not a
  passing trend. It is here to stay.
• Over the past decade, the use of these
  transformative technologies has revolutionized
  the retail sectorbe it a brick-and-mortar store
  or a digital ecommerce shopretailers are reaping
  the benefits of the increased induction of
  intelligence.
• These technologies are not only enhancing the
  shopping experience for customers but also
  streamlining operations and driving efficiency
  for retailers.
• According to a report by Capgemini, 77 of
  retailers believe that AI can drive operational
  efficiencies and improve customer experiences.
• Furthermore, as per Capgemini, businesses
  implementing AI have seen a 61 reduction in
  costs. These statistics strongly suggest that AI
  will continue to play a pivotal role in shaping
  the retail industry.
• After all, embracing AI isn't just about keeping
  up with the times - it's about staying ahead in
  serving the consumer and being informed about
  their challenges, pain points, and concerts. And
  in the fast- paced world of retail, that's more
  important than ever.
• AI in retail is no longer a choice it's made or
  break.