The local store may be a kilometer away from your house. But, if you can open an app on your phone, order the same things –with just the offer you were looking for – and avoid waiting in line or walking around, there are better chances of you opting for the latter! However, if it’s the holiday season, you’ve put off buying a gift till the last minute, and an e-commerce website says you can get it tomorrow with self-pickup from their warehouse 10 minutes away – you will not hesitate, either.
With an increasingly digitized world, today, brands are realizing it is essential to strike an optimal balance between different channels, to optimize processes, cater to dynamic consumer behavior, and successfully boost sales. While this may sound a bit too ambitious, given the volatility of the space and the variables involved, the use of AI is helping retailers carry it out seamlessly, while strengthening each channel individually, as well.
AI is able to study vast data pools to provide in-depth insights in real-time, thereby giving retailers a competitive advantage both in terms of the back-end strategy and frontline consumer engagement. Moreover, it is highly accurate, and significantly minimizes/eliminates human error to provide recommendations and predictions that help brands unlock revenue at every step. As per Juniper Research, the global spending on AI in retail is expected to reach USD 7.3 billion per year by 2022. Here are some key areas where the technology is helping retailers make the most of their efforts:
Enhancing customer service with data
AI can help retailers tailor their offerings according to customers’ historical data, to enhance their shopping experience. This includes gathering, organizing and analyzing data from previous purchases or commonly used search keywords. Amidst growing competition across segments, retailers must prioritize customer service in order to ensure greater retention and satisfaction. The key to this is personalization, and leveraging AI capabilities can help them take this to the next level, making it easier to realign strategies along the way and implement scalable solutions.
An example of this is online thrift store ThredUp, which uses an AI algorithm to track and remember the preferences of individual customers. It has implemented this for its ‘Goody Boxes’, which have second-hand clothes that are as per each customer’s preference, based on the concept that customers can keep and pay for whatever they like and return those which they don’t. AI helps them record this, thus enabling them to ensure that future boxes are more suited to the customer’s style, thereby increasing the chances of them purchasing more/all of the items.
Chatbot assistance on the rise
We have heard that, by implementing AI, NLP and advanced analytics, retailers can empower customers with real-time, automated support through bots for their online shopping. However, companies are now implementing bots for offline stores as well. Stores today are utilizing robots to augment the roles of salespeople – they can instantly answer several basic consumer queries and guide them on the various products and/or services on offer. In this way, they help to free up a lot of time for salespeople to focus on other tasks which require human intervention, while simultaneously creating an engaging, interactive experience.
For example, in the US, Macy’s has implemented a chatbot into their app, which is fed in with tailor-made answers as per each of their stores. The bot can guide consumers on where to find a particular item within the store premises, as well as whether it is in stock. If a customer needs further help, the bot can identify when it is likely that intervention from a human employee is required, and alert the team accordingly.
Optimized marketing campaigns
Retailers can also implement AI algorithms to carry out more accurate, targeted marketing campaigns with ads based on specific customer demographics and purchase behavior and preferences. It has been observed that this simple approach can help brands increase conversion rates by 2-3%, and significantly improves customer loyalty and retention. In line with this, retailers are increasingly using AI to help determine Minimum Advertised Price for their products and keep a check of the pricing listed by resellers in real-time. This ensures they are not losing out on revenue, as multiple streams are under their radar and they can tackle aberrations proactively.
From being with customers online, to playing a part in their in-store shopping experience as well, AI is proving to be truly beneficial in bringing about both efficiency and a touch of novelty to the retail space. It is helping brands seamlessly integrate multiple channels, providing measurable outcomes and empowering them with scalable business impact. For brands, the key to customer satisfaction, retention and onboarding is acknowledging that there is no one-size-fits-all model for AI, but instead, a unique foundation for every individual business. Once this is put in place, they can ensure an optimal ROI at every stage of the retail process for the long run.
(The authors Richa Kapoor is Global Marketing Leader, Absolutdata & Promita Majumdar is Senior Marketing Executive at Absolutdata)