In recent years, the technology has matured to the point where it offers a wide range of applications in every industry. Unsurprisingly, concepts like Artificial Intelligence and Machine Learning has modified many industry segments today by offering out-of-the-box solutions to the customers to address their needs. These technologies have changed the way we relate to each other, how we search for stores, prices and product leads, and even the way we make a purchase.
According to a new research report released by Global Market Insights Inc., the artificial intelligence market in this segment is expected to exceed $ 8 billion by 2024 as it is driven by growing investments worldwide. With retail space becoming broader with more e-commerce platforms, the adoption of AI in the retail market has also increased.
How has Artificial Intelligence changed the retail sector?
In the last decades, we have already noticed several changes in the retail sector. And, Artificial intelligence has reshaped the way we shop, manage supply chains, and set product prices, and some of the key changes we’ve come across are:
- Recommendation engines and customized solutions – Today, many of us can no longer imagine shopping without Amazon’s sophisticated recommendations, but it hasn’t always been that way. Recommendation engines, also called real-time product segmentation, were not widely used about ten years ago. However, most e-commerce companies today are adapting product recommendations based on each customer’s unique interests, propensity to buy, data history, and current customer data. Using recommendation engines drives traffic, delivering relevant content at the right time to the right consumer. This increases customer engagement, converts sales, among other functions. In addition to customizing the customer experience, artificial intelligence is also helping sales and marketing teams to improve their work by being able to use tools that identify their leads most likely to convert based on an internet database.Â
- Computer Vision – Computer vision already has many applications in different sectors. However, in retail, this technology is completely changing the customer experience, both in physical stores and online. Amazon, for example, was surprised when it opened an Amazon Go store where payrolls did not exist. At these stores, customers can pick up items of their choice and leave the store without ever using their credit cards. Items are scanned and customers are billed through their Amazon account using computer vision, deep learning, and sensor fusion. Through in-store cameras and artificial intelligence, companies can monitor the performance of their products on shelves and conduct analysis using machine learning to optimize product placement and promotion.
- Supply Chain Optimization – Artificial intelligence has been implemented at various stages of a supply chain, including efficient inventory management, autonomous replenishment systems, optimal routing and distribution allocations, and so on. The technology has been especially useful for omnichannel retail, where inventory management can be particularly difficult. A leading shoe retailer has implemented a system that links inventory at all points of sale and determines where the order should be shipped from – a store or a central warehouse.
By far, the biggest task in supply chain management is chain planning. Predicting customer demand is the driving force of profit across all chains. Customer preferences, and thus product demand, depend on a number of factors that are represented in large datasets that only machine learning algorithms can interpret.
Closing Thoughts
The arrival of technology and its ever-increasing evolution has brought new challenges for all industries, including retail. The way we consume products has changed, as well as the way we relate to companies and look for the best services. In today’s generation, customers are always looking for practical and even faster ways to solve their problems. The point is that, gradually, these changes will increase! Businesses that are already adapting to new technologies need to be aware of all the news in the market so that they don’t fall behind in a highly connected world.
Looking at the new trends and AI penetration in the industry, it is undeniable that the traditional retail model is bound to end. The technology will reshape the entire retail store, inventory management, and operations cycle, thereby providing a renewed shopping experience for customers. Not only will retail space efficiency and sales increase, but the proliferation of artificial intelligence causes the world economy to grow massively, opening the door for a number of high-tech startups and a plethora of new job opportunities.