Artificial Intelligence (AI), the development of computer systems that mimic human intelligence, is poised to revolutionize the retail industry, change shopping experiences, enhance customer satisfaction, boost conversion rates, and drive revenue for retailers, according to Dr. Julie Nelsen, Director for Professional Sales at Washington State University's Carson College of Business.
"Likewise, we can also expect to see the addition of AI visual browsing, which can transform how customers discover products online, searching for products using images rather than text, making product discovery more intuitive," she said.
"From a business-focused capacity, we should expect changes in automation and efficiency, supply chain optimization, and fraud detection and security. AI will automate tasks that used to be human led, such as inventory tracking, merchandise ordering, predicting demands, and detecting abnormalities and patterns in transaction data to prevent fraud," Nelsen added.
Nielsen brings several notable examples of retailers already using AI, including Sephora, using the Virtual Artist App that allows customers to try makeup products online and in-store virtually; IKEA's AI survey system that gathers customer insights for product design, store layout, and preferences; and Knorr's Instagram integration, which allows users to upload food photos, and AI suggests recipes based on ingredients.
Michael Jaconi, Co-Founder and CEO of Button, sees AI combining user intent and context with retailers' 1st party data to personalize product recommendations on their sites and apps. "The nearer-term opportunity where AI will be deployed at scale for retailers will be seen across their media strategies," he said.
"The retailers that operate their own retail media networks have the engineering resources to build here, and those that rely on 3rd party Retail Media Networks like industry leaders Microsoft or Criteo will benefit from having those technology platforms pushing the AI envelope forward on their behalf. These retail media profit centers will evolve into AI innovation centers for their customers - and with retailers facing more challenges in digital than ever before - they'll need the help," Jaconi added.
Sanjeev Siotia, Executive Vice President & Chief Technology Officer of Manhattan Associates, sees AI as improving online product descriptions, providing quick answers to complex product questions, and enhancing search and select products.
"This technology will result in more robust product comparisons and recommendations," he explained. "We could see a very different digital interaction paradigm that is much more visual and conversational than the traditional keyword search and tiled product displays. "
Nelsen sees these changes in the retailing space unfolding rapidly. "AI adoption is already underway, and its impact will only continue to grow," she explains. "While there are concerns about job displacement, AI will likely transform roles rather than eliminate them. The marketing and operations saying I'm hearing right now is that 'AI won't put you out of a job, but not knowing AI or not doing AI well will keep you from getting and keeping a job.'"
Still, Dale Renner, CEO of Redpoint Global, a customer data management and engagement strategy provider, needs more certainty about how much an AI impact will have on the retail industry.
"Right now, AI for many customers is synonymous with chatbots," Renner said, adding, "While customer-facing AI use cases will certainly expand, AI will also become pervasive in marketing technology, used to provide a better customer experience (CX)."
Jay Topper of Fabric sees another limitation of AI applications in retailing: data. "The collection, storage, and distribution of data will help define a retailer's ability to test and learn quickly," he said. "Simplifying good clean data is critical. In an omnichannel environment, this often will require a shift in thinking from traditional brick & mortar, where data is not as organized and clean as it could be. Legacy technology with significant underlying technical debt will be a blocker to moving quickly as advances in AI progress."
Meanwhile, Diana Zheng, Head of Marketing for Stallion Express Canada's eCommerce shipping service, is concerned about the ethical ramifications of AI in the retail space, especially regarding data protection and algorithmic biases.
"As we adopt AI technologies, transparency, accountability, and responsible data use will be essential for retailers to maintain consumer confidence and trust," she said.
"Overall, AI has the potential to revolutionize the retailing landscape, allowing brands to provide more personalized, streamlined, and seamless experiences for consumers around the world. Retailers must adapt and innovate as we move into this AI-powered future," Zheng added.
