The Future of Retail: Turning to AI and Automation in 2023

It's no secret that the retail market is ever-changing; six months ago, consumers had different interests and markets faced different headwinds. To better combat the turbulence, in everything from logistics to loyalty, retailers have been turning to automation and artificial intelligence (AI) to receive support in handling orders, managing market insights into customer demographics, and increasing brand awareness — all while keeping costs down.

Reduce Employee Hiring With Conversational AI

Deloitte’s 2023 Retail Industry Outlook reports that seven in 10 executives say labor is the No. 1 challenge heading into 2023. As of Nov. 30, 2022, 879,000 retail jobs remained unfilled in the United States. Retailers are turning to assisted AI operations to alleviate some of the pressure employees face when short-handed. By implementing services such as conversational AI — i.e., virtual assistants or chatbots that “talk” to people — retailers can depend on automation to answer common customer questions and complete various actions. These services can supplement mundane tasks and allow workers to manage their time efficiently.

For example, as customer questions are often repetitive (tracking orders, changing shipping addresses, placing new orders, finding the nearest store), retailers can use conversational AI to quickly resolve many different types of inquiries, as automation provides customers with 24/7 self-service on any device of their choice to get the information they need. This increases the availability of human workers to give their time and service to more complex tasks. Retailers using conversational AI are expected to save $11 billion annually by 2023, a 33 percent increase since 2018.

AI in Personalized Offers and Recommendations

In the last three years, retailers have seen that both the shopping experience and the consumer has changed. As e-commerce surged, growing from 15 percent in 2019 to 22 percent in 2022, according to a 2022 Report published by Morgan Stanley, shoppers changed how they buy and engage with brands. Consumers are no longer attracted to what items are hot for the general public; instead, retailers and e-commerce companies use insights from consumers’ individual preferences to deliver highly personalized product recommendations. Using data gained through AI, retailers understand and service customer preferences, leading to an increase of around 10 percent to 15 percent in revenue, according to the 2021 Mckinsey Next in Personalization Report.

Combatting Competition by Increasing Brand Loyalty

Market movement in 2022 has primarily impacted consumer habits and retail strategy in 2023, leading retailers to get creative in combating competition. While inflation seems to be easing for the individual consumer, macroeconomic factors and talk of a recession still have retailers bracing themselves as consumers remain penny-conscious. In this uncertain and turbulent economic market, retailers seek to differentiate themselves amid the mounting competition through insights gathered by assisted AI programs.

AI can create more personalized experiences for customers and resolve any issues quickly, translating into increased brand loyalty. Needed in the competitive market for consumer attention, assisted AI can use sentiment analysis, churn prediction, review customer feedback and habits, and provide retailers with the necessary insights to understand consumer satisfaction.

Retailers are more equipped than ever as assisted AI software companies offer solutions to navigate labyrinthian consumer demand and preferences. In the years to come, assisted AI will only increase in demand as it provides organizations with a way to enhance employee and customer experiences and improve customer service agent productivity at scale.

Muddu Sudhakar is the CEO of Aisera, an AI-driven service experience platform for automated customer experiences (CX).