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How AI is Changing the Retail Industry

  • 28 November 2017
  • Shawn Farner

Artificial intelligence isn’t a terrifying autonomous mastermind waiting to take over our computers and robots on its journey toward eradicating humanity. At least not yet. Right now, it’s actually present in a lot of the things we use every day. Artificial intelligence powers the enemies in our video games. It searches for and flags fraud in our financial systems. And it identifies our friends in photos on Facebook, automatically tagging them based on facial recognition. Artificial intelligence already does so much for in our daily lives, and as it advances and gets smarter, it’ll start to do a whole lot more for retail companies and consumers.

We’ve gathered up some of the ways AI is already changing the retail industry, as well as some ways it could be used in the future. Here they are.

Always Learning Stock and Inventory


Before artificial intelligence, stores would use one of two methods when deciding how much of a product to order: past experience with sales if they’d ordered previously, or gut instincts. Artificial intelligence opens up a whole new world of insights to retailers who order and stock products. AI can study worldwide or regional shopping trends to make an incredibly educated estimate about sales for a certain product, ensuring retailers order the right amount. And smart systems can make sure a hot product never runs out of stock, ordering products to stock back up as soon as the current stock begins running low. Artificial intelligence will only serve to make inventory and stock management smarter for retailers as time goes on.

Personalized Shopping Experiences

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If you’ve done some online shopping in the recent past, you’ve probably noticed some of your recent purchases sitting on the front page of the retailer’s website. This isn’t pure coincidence: this is data at work. The retailer is using your past purchase information to put those products on the home page in order to give you a quick path to repurchase, which is more likely since you’ve bought that item in the past. Where does artificial intelligence come in here? Well, if you’ve noticed some of your past purchases on that page, you may have also noticed a section using your past purchases to show new products that may interest you. Artificial intelligence combs through shopping data for millions of customers and looks for patterns. What else did someone who bought what you bought also get from this retailer? When the AI sees an example of this, such as people who buy lamps also buying light bulbs, it shows light bulbs to lamp buyers. It’s a way to say, “Hey! This item might go along with that other thing you bought,” and many customers appreciate this. As AI moves forward, you’ll see things like this a whole lot more.

Tailored Discounts and Deals


If you shop at a certain retailer a lot, that store likely has a good idea about what you like based on your past purchases. And as we saw in the item above, retailers can use artificial intelligence to find other items you might potentially have an interest in. Now let’s take it one step further — what if a retailer could offer you a personalized deal on an item you’ve either bought previously or might want to buy? Artificial intelligence is starting to make this possible. Let’s look at some of the old ways to offer discounts: one-size-fits-all sales. These sales are either advertised on a website or in sales flyers, and most customers look through the items hoping an item they want has a discount. With artificial intelligence, retailers can offer a customer a unique deal that is highly targeted to their buying habits, making it far more likely they’ll buy that item (and hopefully a few others).

Personalized Marketing

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Maybe a retailer isn’t quite in position to start offering deals to everyone based around the exact items they want. Some retailers offer deals based on stock they need to clear out, and sometimes, there are customers who just don’t want that item. That’s fine. So how can artificial intelligence help here? Through personalized marketing, of course! Think about the emails you get from your favorite stores. They’re used to announce new features and, sometimes, sales. Using artificial intelligence, emails can also include links to discounted items a shopper might be interested in only when that product is on sale. These emails don’t need to go to customers who won’t be as interested, which can help reduce their blindness to later emails that might have something they want. And the emails that go to the potentially interested shoppers can help move that product a lot more quickly. It’s a win for everyone.

More Intelligent Chatbots


It seems like you can’t visit a retail website today without running into some kind of chatbot, whether it’s right on the home page or hanging out in the support section of the site. At the moment, chatbots are programmed at a pretty elementary level, essentially trained at this point to identify keywords in a customer’s text in order to respond with something helpful. But we know artificial intelligence can bring a lot to the table in many areas, and as far as chatbots go, it’s almost a given they’ll become smarter as AI makes its way into those systems. Imagine being able to enter a discussion with a chatbot that’s able to reference support documents and help you through a problem as effectively as a human? What if a chatbot could help coordinate item returns for customers without any human intervention? We’re well on our way to that future, and it’ll be thanks to artificial intelligence.

It’s becoming pretty clear: artificial intelligence is going to play a major role in the retail sector as it comes along and stores begin to take advantage. It’ll not only help retailers operate more efficiently: it’ll also help consumers find the products and support they want quickly.

Can you think of other ways AI could be used in the retail space? Leave your thoughts below!

About Shawn Farner