The role of AI in shaping the future of retail in 2024

Amber Hovious
8 April, 24

From self-driving cars to Siri, artificial intelligence (AI) is leaving its fingerprints on a number of technologies, designed in each instance to create convenience and streamline tasks. At its very core, AI is leveraged by using a set of pre-defined rules to assist with basic problem solving. However, the technology has since evolved to exhibit machine learning, and as its development now continues to catch the eyes of the masses through the likes of Generative AI, its wide range of potential uses are attracting businesses across the globe. While it makes its way through a number of industries, AI also has the potential to play a significant role in shaping the future of retail.

According to Statista, 73% of retailers are currently using some form of AI, with that number set to increase throughout 2024, with 15% of businesses planning to implement AI over the course of the year. The overall goal of AI integration into the retail industry is to increase efficiency, productivity and revenue while reducing costs.

As advancements in AI become further sophisticated, retailers can use the technology to assist employees in a wide range of internal processes, from delivering personalised shopping experiences to streamlining supply chain operations. Its versatility allows retailers to minimise the time taken to perform tasks through automation, and use the technology to scope and analyse market trends to help retailers make better decisions, faster.

AI’s Role in Inventory Management

AI tools can help retailers streamline a number of their day-to-day operations, particularly when utilised to relieve retailers from labour-intensive processes such as inventory management.

Traditionally, inventory management practices require employees to take manual stock counts in-store, checking which items are running low and re-ordering products based on current levels. The challenge with this traditional method is that it not only takes a significant amount of time for one person to go through every individual item, it is also prone to human error. In-store associates can take hours to count backroom stock, compromising a retailer’s ability to provide high-quality customer service during the ongoing labour shortage. Furthermore, with the risk of human error, there can be no true visibility of inventory accuracy. As such, the decisions made from manual counts become unreliable.

AI alone cannot solve this issue. However, when deployed alongside an effective inventory management technology – such as item-level RFID – retailers will not only gain real-time, accurate insight over their stock levels, but AI will leverage the data gathered to make instant stocking decisions for the retailer. When provided with data around sales, orders, and existing inventory, AI can streamline the inventory management process by making recommendations about anticipated inventory requirements.

This process can be taken another step further. Combining key market trends with customer buying behaviours also allows AI to assist retailers in long-term inventory decisions such as forecasting. Not only will AI recognise stock levels, but it will also use previous sales patterns to predict future consumer demands, and react accordingly to ensure retailers are ready for any anticipated trends. This allows retailers to maintain optimal inventory levels and minimise waste. It also helps to maximise customer experiences, with accurate availability and fulfilment information shared with customers in real-time.

How AI Can Improve Customer Experience

High-quality inventory management practices can play a significant role in enhancing the in-store customer experience. While these developments help reduce customer wait times and improve in-store service, retailers are now also enhancing their efforts through increasing personalisation.

Customer Relationship Management (CRM) tools can be used to collect relevant data from customers. The technology allows retailers to gather relevant customer information such as purchase and browsing history to understand their evolving preferences and needs. Retailers can then leverage AI in tandem with their CRM platforms to create truly bespoke experiences.

While CRM on its own is already helping retailers to provide in-store personalisation, AI can enhance these efforts, combining context with existing consumer data. Using data collected from outside sources, such as upcoming weather predictions to wider national events, AI can expand on basic details such as name, location and purchase history, by making assumptions about consumers’ lifestyles, analysing their purchase patterns to gain a deeper understanding of customers, such as the preferred hobbies and sports, or whether they have children or pets. Predictive analytics can then help make accurate suggestions based on the profile the retailer has curated for each individual.

Retailers can use this information to their advantage by providing targeted offers on products their consumers buy regularly or are likely to be interested in. Not only will this push consumers to follow through with their purchase and increase revenue, but it will also increase satisfaction levels. Providing a truly bespoke in-store experience where store associates have access to this information increases the chances of customer retention and loyalty moving forwards.

Overall Benefits of AI to Retailers and Customers

As we move into a more tech-dependent world, customers have become used to the convenience and seamlessness that the latest innovations provide, especially when it comes to shopping.

The development of AI comes with many benefits. By providing accurate personalisation and increased fulfilment, customers are able to enjoy a bespoke shopping experience. With optimised inventory practices, retailers can avoid overstocking and stockouts and AI’s capabilities of machine learning to deliver predictive analytics help retailers gain a competitive edge within the market, increasing satisfaction, revenue and efficiency.

The possibilities with AI are endless and will likely play a significant role in the transformation of the retail industry. Retailers are acting quick to invest in AI, with many planning to incorporate it into their operations within the next year. With the wide range of opportunities unlocked by the technology, retail operations and customer experiences will only continue to improve.

Related posts

9 February, 24
Revolutionising the instore shopping experience with state-of-the-art Electronic Shelf Edge Labels (ESELs) enhances the in-store shopping experience for customers and streamlines operations for retailers.

Latest posts