August 15th, 2023

“AI has been powering retail for years, but retailers have only been scratching the surface of what’s possible. A combination of the right solutions and an intelligent approach to adoption and data management will help all retailers reap the benefits of AI.”- Forbes

The future of retail and AI holds tremendous potential to reshape the way we shop, interact with stores, and experience the entire retail ecosystem but how brands choose to incorporate AI will depend on individual brands goals and needs.

It’s not a secret that the retail market is ever changing, with different consumers interests and the market facing new challenges. To combat the turbulence, in everything from logistics to loyalty, brands have been looking for support in handling orders, customers experience and brand awareness, and with Artificial Intelligence in the retail market set to reach $24.1 billion by 2028, it seems AI could be the answer.

5 ways brands can integrate AI into their retail strategy, and why.

Generative AI is expected to account for 10% of all data produced so building trust and understanding around AI is crucial as it becomes an invaluable creative tool. The retail sector generates masses of data every day by scanning products, analysing customers, measuring promotions and tracking sales trends. This data, collecting by sophisticated machine learning, can be processed to provide a real advantage to brands when compared to their competitors and AI opens the door for brands to make intuitive decisions that optimise their retail presence. AI is and will shift what retail roles look like, making brands more efficient. As technology continues to evolve, retail is seeking to understand how artificial intelligence is reshaping the industry. Integrating AI into retail can have numerous benefits and can be achieved by:

1) Trend Forecasting.

AI can analyse social media trends, fashion shows, and other sources to predict upcoming fashion trends, helping retailers stock the right products at the right time. Fashion retailers now use AI forecasting to decide styles, patterns, colours, and fabrics for their collections by analysing articles and social media content. AI allows brands to find out what consumers think about a brand and its products by analysing real-time mentions on social media and discussion forums which can then dictate what is stocked in their store. High street clothing store, H&M, relies on staying on top of trends to be successful. The store uses AI to analyse store receipts and returns to evaluate purchases at each store. The algorithm helps the store to know what items to promote and what to stock more of in certain locations. This data could find that floral skirts sell well at urban stores whereas a different item might be flying off the shelves in more rural settings. This helps retailers decide on the inventory which will match what customers want but ultimately reduce waste and make more sustainable decisions.

2) Inventory Management.

AI-powered systems can optimize inventory levels by predicting demand patterns, reducing overstock and stockouts. Brand’s buyers can also predict how many of each item is needed and when they’ll need it. So, there’s less chance of running out of stock, which means greater revenues, higher profits and happier customers! AI’s role in inventory management is all about reducing the number of manual processes which cuts the number of errors resulting from supply chain complexities and, finally, helping supply chain managers order the right number of products at the right time leading to improved operational efficiency and customer satisfaction. Walmart is one of the largest retail stores in the world, and in their stores, they use robots to help patrol their vast aisles. The shelf-scanning robots, found in dozens of their stores, scan shelves for missing items, things that need to be restocked or price tags that need to be changed. These robots free human employees to spend more time with customers gaining more knowledge on their wants and needs and ensuring that customers aren’t faced with empty shelves and unsatisfied experiences.

3) Personalised shopping experiences.

Ensuring brands offer their customers a more personalised shopping experiences is very important as this can be the reason customers stay loyal, make repeat purchases, and promote the brand. AI enables this by allowing retailers to gather and analyse customer data to provide a more personalised approach to retail. This can include tailored product recommendations, targeted promotions and even instore navigation assistance based on individual preferences and purchase history. US hardware store, Lowe, have taken this concept even further by offering their customers a personal bot, known as Lowebots, when browsing their stores. The robots can guide customers to products in store, retrieve items, share expert knowledge with customers as well as asking customers questions to help prompt shopping decisions. By providing a more tailored shopping experience, brands can capture the attention of customers who may otherwise have left the store or site without making a purchase, increasing the average basket spend by suggesting products or taking advantage of upselling opportunities. These solutions can build stronger relationships between brand and customer through showing them that they are valued and understood.

4) Biometrics.

AI technologies enhance the accuracy and effectiveness of biometric systems by analysing and processing the data extracted from these characteristics. In recent years, ordinary people have been measuring their biometrics via a smartwatch or similar, and sharing this data with companies such as Google, Apple, Fitbit and Strava to track and determine their day-to-day levels of health and fitness. Whilst there is still a long way to go and a lot to understand, we are now starting to see biometric data being used to influence and drive the bricks-and-mortar strategies of brands’ retail activations. Clothing store, Uniqlo, is pioneering the use of science and AI to create a unique in-store experience. Select stores have AI-powered UMood fitting rooms that show customers a variety of products and measures their reaction to the colour and style through neurotransmitters. Based on each person’s reactions, the rooms then recommend products. Customers don’t even have to push a button; their brain signals are enough for the system to know how they feel about each item. Investment in Biometrics and facial recognition tech, which can detect emotion in shoppers as well as measure how long they spend in the store and which products they look at, is expected to reach more than $11 billion by 2030 from its current market size of $4.3 billion.

5) The Design.

AI is having an exciting impact on the retail, branding, and interior design. As discussed in the four points above AI can influence the retail systems that make up a store, to offer a more intuitive customers journey, but AI can also influence the design of the store itself – both internally and externally. It is important to note though that the power to trigger the innately human experience of emotion lies in the equally human ability to empathise, interpret, and reframe. AI is learning to read and copy human emotions and the potential is incredible but while they can mimic, machines cannot think. AI doesn’t have the ability to imagine, and it can’t connect to humans, as humans do. However, AI can help designers to automate tasks, improve the design processes and generate new ideas, with the assistance of human input, that may generate more obscure designs. AI-powered image recognition and analysis can also help retailers optimise store layouts and product placements. This ensures that high-demand products are placed in strategic locations, increasing sales. Design studio, Gaudism, uses AI to create ethereal designs that encourage mental clarity and mindfulness. Characterised by organic forms and seamless, dream-like landscapes, the mesmerising designs offer a futuristic take on bricks-and-mortar retail that only the technology of an AI machine can generate.

Are you looking to activate your retail store with AI?

We understand the importance of keeping up-to-date with digital trends and new technology releases to create perfectly balanced omnichannel retail experiences for seamless shopper journeys. We can curate, and implement, a phygital strategy for you that works towards achieving your deliverables in the future of retail.

Let’s talk.