AI in Retail: Where Are We Now, Where Are We Going?
Quietly and subtly, artificial intelligence (AI) powers have been changing the way we interact with many of the most popular systems today, from filtering the things that you see on your news feed to coming up with new solutions for customer acquisition and retention.
In retail, AI is appearing more often than ever before. In fact, there are currently 45 companies focusing on AI in retail, from recommendations to multichannel marketing.
So, what's exactly going on? Are the robots taking over the retail sector for good, and what does this mean for customers and retailers alike? Let's take a closer look.
AI Supporting Customer Decision Making
If there's one thing that AI has proven itself to be exceptional at, it's producing relevant and personalized content for consumers that's designed to propel them along the sales funnel, and simplify the decision-making process. Consumers can already interact with a shopping assistant to help them choose.
The best way to convince a consumer to make a purchase is to show them something that's relevant to their needs.
For instance:
- 1-800-Flowers.com uses AI to help customers to pick the perfect gift. The retailer's "GWYN" system acts like a personal assistant that learns your preferences as you interact with the system. By asking questions, GWYN can determine the most appropriate gift for any situation, per sentiment, occasion and who the gift is for.
- Stich Fix, an apparel subscription service, has built its entire business around AI. The retailer uses AI to tailor accessories and clothing to the unique tastes of each individual. With AI learning, Stitch Fix can offer a customized experience for every user, and it's been incredibly successful, with over 80 percent of clients returning within three months for a second order.
AI Helps With Business Decision Making, Too
It's not just the customers that are seeing the benefit of AI developments. AI is also changing the way that business professionals generate insight about customers to provide contextual content and successful nurturing schemes.
For businesses, AI is like an inside man that helps to give them the behind-the-scenes scoop into what their customers want and need so that they can deliver a more personalized experience.
For instance:
- Watson AI can actually analyze tone and understand the complicated nuances of natural language. Over time, it learns how to adjust its offerings to give consumers better results.
- AI can even help with stock management. Watson is currently working with retailers to monitor purchase rates, consumer behavior and more, helping to avoid out-of-stock signs and overstocking.
Where's AI Going?
We can already see that AI systems are moving swiftly along the path to success. In fact, according to Gartner, by 2020, around 85 percent of all customer interactions in retail will be managed by AI. This means new product discovery solutions, marketing opportunities and customer retention options introduced by AI.
Though steps are already being made, there's still a long way to go before you can log onto a website and have an experience that's completely different from the one that your friend and relative would get.
Evolutionary algorithms, or "EAs", are currently well-suited for these issues. EAs work by generating a number of solutions for a problem, and measuring their performance before building new candidates based on the successes that were already measured.
At SMARTASSISTANT, we're currently experimenting with different EA approaches to automatically adapt, reorganize and optimize interactive digital advisors for a more personalized experience and to reduce maintenance effort.
AI means that every step of the buying journey — from discovery to delivery — can give retailers and customers alike tangible and important advantages that constantly enhance experience and simplify buying.
Martin Schliefnig is the co-founder and managing director of zoovu, a digital advice suite that allows retail businesses to create and launch interactive product advisors.
