As we can see from its current applications, the potential uses for artificial intelligence in retail are endless.
Artificial intelligence in retail has become a key element in the digitalization of in-store retail from AI-enhanced delivery solutions, personalizing the customer experience using AI. For retail, AI represents an opportunity to offer a truly new multi-dimensional retail experience.
At the manufacturing point, smart solutions can streamline the process and reduce waste
Further on in the chain AI-enhanced delivery solutions can optimise delivery.
However artificial intelligence in retail is not just for use behind the scenes.
Interactive interfaces, personalized catalog, and targeted marketing campaigns are all driven by artificial intelligence in retail-focused applications.
As more research is conducted and perfected new possibilities, such as virtual reality mirrors and automated purchases, are realized.
Consequently the importance of artificial intelligence in retail will continue to grow.
The automation of the retail process is serving to streamline and improve the service.
As the influence of artificial intelligence in retail grows more companies are adopting and innovating.
This is being done to help them stay ahead, or set them apart from their rivals.
Through the course of this article we will see the ways in which artificial intelligence in retail is already having a major impact.
We will look at applications in everything from manufacturing and logistics to how artificial intelligence is altering the customer experience.
We will also highlight some of the major innovators in artificial intelligence in retail and look ahead to what the future could bring.
Table of Contents
Smart Solutions can Optimize Inventory Management
Software powered by artificial intelligence in retail can be used for a number of different aspects of retail management.
Not only can it be used to place and track orders, but artificial intelligence in retail focused software can forecast inventory needs.
The software is also used to prevent excess stock from piling up.
This is done by configuring artificial intelligence in retail applications to identify which products have historically built up in a warehouse.
By preventing stock from piling up the process becomes more efficient.
It also helps to reduce waste.
One such artificial intelligence in retail powered system that offers inventory management is the Inventory Optimization Suite.
This product has been developed by the startup Celect.
Their platforms are currently being used by many clothing manufacturing brands such as Puma and Ralph Lauren.
It works by using machine learning and predictive analytics to optimize inventory management.
One of the features of this product is that it can provide models of future customer behaviour and purchasing patterns.
Artificial Intelligence in Retail can Identify Popular Products
Enhancing the role of artificial intelligence in retail is Celect’s Plan Optimization application as used by clothing brands such as Urban Outfitters.
This has been developed to help retailers identify unpopular products.
Once highlighted the application suggests better uses for the store space, suggesting products that are more likely to sell better.
This application of artificial intelligence in retail also allows users to see which products are overstocked for their store performance.
It also highlights products that have the potential to grow their market, if given better promotion or store position.
By using artificial intelligence in retail stock management we can better manage the stockroom, preventing gluts of certain products.
Additionally these smart solutions can highlight potential growth products and can be used to optimize store layouts.
Smart Applications Influencing Sales Approaches
This application of artificial intelligence in retail sees software and robots simulating and predicting human behaviour.
In partnership with Aldebaran, a robotic manufacturer based in France, in 2010 SoftBank telecom operations, of Japan developed Pepper.
A humanoid robot Pepper is able to perceive human emotions.
It’s main purpose is to interact with customers, replicating human interactions.
Pepper is currently used in around 140 of SoftBanks Japanese stores and has also been trailed in American stores.
Such is Peppers impact, it has been credited with increasing footfall and revenue that Nestle plan to place Pepper robots in a number of its Japanese Nescafes.
The popularity of in-store, meet and greet robots like Pepper may yet prove to be a novelty.
However if this task can be automated then it will allow staff to better focus on the business end of the customer interaction.
Smart Sales Assistants
Furthering the role of artificial intelligence in retail from simply being an automated meet and greet interface is the smart sales assistant.
The sales assistant software developed by Conversica is intended to automate sales, enhancing the exchange in the process.
This is largely done by using algorithms to identify and converse with leads over the internet.
Conversica has reported that being able to generate authentic-sounding message results in an engagement rate of 33%.
In 2016 one of Conversicas automated sales reps, Rachel, managed to register a 305 email response rate according to a Star2Star Communications case study.
This sales assistant software is customisable, meaning that this application of artificial intelligence in retail can be used across the industry.
Using AI for Pricing Optimisation in Retail
Applications of artificial intelligence in retail can also be used to alter pricing structures.
This allows businesses to quickly respond to consumer demand and also changes in competitors pricing structures.
Retail giants such as Amazon have long has sophisticated pricing software and large amounts of data available.
They have been able to use this information to react to changes by the competition.
As a result, Amazon has been able to quickly and consistently offer the best deals, satisfying consumer demand.
This has helped Amazon to become a dominant force in many retail areas.
Traditional or smaller retails have struggled to compete with Amazon partly because they don’t have this pricing flexibility.
However, this is changing.
Artificial intelligence in retail-focused services and startups are increasingly making flexible, reactive pricing an accessible option.
Today there are a number of applications available that automatically adjust prices.
One such application has been developed by Wise Athena.
The software powering these applications is able to take into account a number of factors such as competitor’s promotions, local events and weather conditions.
Smart ways to Forecast Future Trends
The impact of artificial intelligence in retail will not be confined to stock management and production.
Algorithms can be powered to record and learn shopping habits.
This mass of data can then be sorted and transformed into something a lot more useful.
By analysing past shopping trends the algorithms can also predict what will be popular in the future.
This application of artificial intelligence in retail can further help to improve inventory management.
One company employing artificial intelligence in this way is Hivery.
They are using the information produced by algorithms to optimise product selection in vending machines.
Coca Cola is just one of the major names making use of Hivery’s developments.
As well as producing product popularity information for the entire range of vending machines these algorithms can also highlight the popularity of items in each individual machine.
This information can be used to stock each machine with the best possible selection.
If this application of artificial intelligence in retail can be upscaled it will allow entire stores to optimise their product selection.
This application of artificial intelligence in retail is relatively new, but it is already growing in popularity.
The most well-known example is IBM’s Watson.
This enables numerous eCommerce retailers to manage orders and engage with customers.
Building on this use of artificial intelligence in retail is the rise of the automated gift service.
AI can Power Personalised Gift Services
One such example is Gifts When You Need, launched in 2016 by 1-800-Flowers.
Chris McCann from 1-800-Flowers told Digiday that within 2 months of launching 70% of online orders were completed using Gifts When You Needs intelligent suggestion service.
Similar to chat bots this is a way of using artificial intelligence in retail applications to replicate the concierge service.
An interactive interface asks the user a series of questions about the intended recipient.
This information is then used to suggest an ideal gift or gifts.
A number of other companies are also realising the benefits of this application of artificial intelligence in retail.
For example North Face is also using IBM’s Watson to power a conversational interface.
This prompts users to answer a series of questions related to their purchase, such as location and need.
The application is then able to recommend the best jacket, or item, for their needs.
This use of artificial intelligence in retail is streamlining the customer experience.
By asking a series of easy questions, algorithms are able to sort through databases of information.
The end result is a suggestion, or suggestions, that are tailored to perfectly need the customers needs.
Automated Payment Services
The easier that a customer finds a service to use the more likely they are to complete a transaction.
Easy of use also encourages repeat custom.
One of the easiest ways to improve the customer experience is to make paying for products as easy as possible.
By implementing artificial intelligence in retail driven solutions here we can improve conversion rates and increase profit levels.
Increasingly the most common form of e-payment is PayPal.
Since 2013 the company has protected digital transactions with fraud detection algorithms.
Part of this protection has seen security detection algorithms learn purchase patterns.
This application of artificial intelligence in retail means that PayPal has been able to make digital transactions safer.
For example, they are now able to determine between friends simultaneously buying concert tickets and identity theft.
PayPal is not the only company looking to use artificial intelligence in retail to make reduce payment fraud.
One other, of many, companies working in the same area is Sift Science.
Like PayPal, they are using machine learning to detect cases of payment fraud.
Airbnb, twitter and Wayfair are just some of the many companies using Sift to make their websites safer.
Automating Instore Purchases
This application of smart technology is not just for online stores.
It can also make physical shopping a check-out free experience.
Applications such as Amazon Go allow customers to pick up whatever products they want and leave.
As long as the customer remembers to check in when they enter the store their entire visit will be tracked and automated.
Sensors track the customer’s actions throughout the store, recording what they place in their basket.
When the item leaves the store, the customers Amazon account is automatically charged.
This use of artificial intelligence in retail can potentially automate the entire process.
Not only will this make shopping a cash-free experience, but possibly even a plastic-free one.
Personalising the Catalogue
One of the most common retail experiences is browsing through catalogues.
For a while, online shopping threatened the existence of the catalogue.
The idea of searching through hundreds of items to find the relevant product seemed ridiculously old fashioned.
However, now, artificial intelligence in retail is being used to revolutionise the catalogue experience.
As we have already seen artificial intelligence in retail has allowed for the creation of chatbot based recommendation engines.
This application of artificial intelligence in retail can be widened to create a personalised catalogue.
Brands such as Boden are already using this application of artificial intelligence in retail to revive their fortunes.
These will highlight items suited specifically to the user, including items in their size, favourite colour and other personal preferences.
This application of customised retail can be employed by a range of retailers, from clothes shops to bookstores.
READ MORE: AI’s Personalization Paradox
We can also use artificial intelligence in retail to improve forms of customer communication such as marketing campaigns.
As technology improves, large, generic marketing campaigns will be replaced by smaller, more personalised messages.
One company leading the way in this application of artificial intelligence in retail is Ometria.
As evidenced by their work with Charlotte Tilbury, Ometria is effectively combining customer and marketing data with Ai and machine learning tools.
The end goal is to create hyper-personal marketing communications, tailored to the interests and preferences of each individual customer.
While this use of artificial intelligence in retail is close to becoming a reality, another potential application is also being developed.
As evidenced by the Economists light bulb campaign companies are exploring ways of using smart technology to target customers as they walk along the street.
There are a number of possible ways this could be realised, from smart billboards to location sensitive push notifications.
Intelligent Communication Channels
Voice enabled assistants such as Amazon’s Alexa or the Apple developed Siri are leading the way in artificial intelligence in retail driven communication channels.
Currently these applications are consumer driven.
This means that they only respond to the user and the users needs.
For example voice assistants can deliver reminders, trigger actions and answer questions.
All of these interactions are only carried out after being prompted by the user.
In the future these voice enabled assistants may become proactive.
They will be able to make suggestions, such as recommend music, activities or products based on the user’s past history.
As the ability of voice-enabled assistants grows they will become increasingly entwined with other applications of artificial intelligence in retail and other areas.
Currently, a number of companies, such as Amazon, are exploring ways for users of voice-enabled assistants to make purchases orally.
This will take away the need to visit a physical store or look up a website.
As artificial intelligence in retail applications such as chatbot powered interactive interfaces evolve so will voice-enabled assistants.
The end result will be for users to communicate directly with a favored brand.
In return brands and companies will be able to fully optimize and personalise advertising campaigns.
Advanced Gesture Recognition
Emerging from the use of artificial intelligence in retail-driven digital catalogues is the notion of advanced gesture recognition.
This application monitors how successful items are with shoppers.
Sensors, placed around a shop or contained within a robotic sales assistant, can be used to record both facial and hand gestures.
This information is then analysed by a series of complex algorithms.
Once processed this information will tell the sales assistants, either robotic or human, how likely a sale is.
This application of artificial intelligence in retail can also convert the information into a prediction of how likely an item is to sell well.
This information can then be fed back into the inventory management systems helping to prevent gluts of certain items.
If an item is predicted to be popular stock levels can be checked and more items ordered if necessary.
The information can also be used to help determine pricing structures.
Items deemed unlikely to sell well can be reduced or placed on offer.
Coffee brand Douwe Egbert has used gesture recognition technology to great effect in a vending machine.
Yawning in front of the machine automatically triggers it, pouring customers a free cup of coffee.
AI Solutions can be Used to Enhance the Customer Experience
By using artificial intelligence in retail to monitor customer reactions information can also be gathered and fed into recommendation engines.
In this scenario, the sensors monitoring physical reaction will replace the need for chatbots.
By monitoring physical reactions the recommendation engines will be able to suggest items better suited to the customer.
Brands such as H&M are already using chatbots and AI to enhance the customer experience and to reverse sales decline.
Incorporating advanced gesture recognition abilities into artificial intelligence in retail applications will only help to enhance the customer experience.
By working in a similar way to chatbots and interactive interfaces, algorithms will be able to quickly process streams of data before suggesting items that match customer preferences.
Through the Smart Looking Glass
When shopping for clothes many people hate the experience of trudging to the back of the store to try on items in a cramped little changing room.
In an attempt to avoid this, some people just buy clothing and hope that it will fit and look good on them.
However artificial intelligence in retail applications could soon make this process a lot more pleasurable.
Instead of having to try on different clothing items virtual reality mirrors are being developed.
These are able to show the user what an item of clothing will look like on them.
This takes out a lot of the guesswork of clothes shopping, without the need to visit the changing rooms.
Brands such as Zara have been quick to launch their own virtual mirror app.
These artificial intelligence in retail driven platforms will allow the user to try on numerous items of clothing in quick succession.
It will also allow users to mix and match clothing items and accessories.
For people who struggle to match items, this application is incredibly beneficial.
Artificial intelligence in retail has many different applications.
One of the major ways in which artificial intelligence can change the sector is in terms of manufacturing.
One example of this is the Brilliant Manufacturing software developed by General Electric.
This application of artificial intelligence in retail has been inspired, in part, by the company’s relationship with various manufacturers.
The Brilliant Manufacturing software aims to improve efficiency throughout the process, from design to distribution.
With a suite of operational intelligence and smart analytical tools the software is versatile enough to be used by a range of manufacturers.
This application of artificial intelligence in retail can save a company both money and time.
By improving efficiency, this application can also help to reduce waste.
It is currently being used by a number of companies including Capgemini.
Another GE development, their Plant Applications product, uses big data analytics to collect granular level data at all points of the production process.
This information can be used to reduce productivity waste and prevent defective products from being processed.
Toray Plastics is just one company that is using this particular application of artificial intelligence in retail.
Smart Application to Speed Up Productivity
Another application of artificial intelligence in retail and manufacturing is to use robotics to speed up operations.
The Gakushu Learning Software has been developed by Fanuc.
Initially intended to be used on assembly lines and spot welding tasks, Fanucs 2016 partnership with Nvidia expanded the scope of the product.
With access to Nvidia’s GPUs, Fanuc has been working on developing learning in robots.
The Gakushu Learning Software uses sensors to register and store data.
This information then allows a robot to learn a manufacturing task.
After the learning process is complete, the sensors can be removed.
The robot is now able to autonomously complete the learnt task.
By pairing robotic learning with an accelerometer, the robot is able to learn motion.
This means that vibration control is also learnt, improving stability.
According to Bloomberg Businessweek,Tesla is already using Fanuc robots in it factory, hoping that they can speed up manufacturing times.
Employing smart solutions such as machine learning and artificial intelligence is retail and manufacturing is already starting to transform the retail process.
Manufacturing times are improved while waste and cost is reduced.
As the technology improves the role of artificial intelligence in retail manufacturing will only increase.
AI Applications to Streamline Logistics
Many companies outsource delivery to specialist firms.
This saves the company time and allows an experienced practitioner to cover the logistics and ensure that the delivery is safely made.
However deliveries can also be expensive and cumbersome.
That is why many companies are now looking towards smart solutions.
Artificial intelligence in retail need not be solely about improving in store experiences.
Delivery by Drone
Amazon has, since 2016, been in partnership with the UK government.
The aim is to enable drones to make small parcel deliveries.
This is a complicated operation, the company has to coordinate with a number of different regulators such as aviation agencies.
However Amazon are hopeful that they will be able to implement their technology.
The working name for this particular application of artificial intelligence in retail is Prime Air.
While trail flights have been taking place since late 2016 the company is still working with regulators to ensure that the service is safe and reliable.
A similar application of artificial intelligence in retail delivery is being developed by fast food chain Dominos.
The DRU, Domino’s Robotic Unit, is a delivery robot.
Using robotics technology that has been developed for military combat training Dominos are seeking to optimise the delivery process.
Using sensors the DRU will be able to identify and navigate navigate the quickest delivery route.
Not content with delivering a quick and reliable service the DRU will also keep food and drinks at the correct temperature until they reach the customer.
AI can Potentially Automate Delivery Methods
While Dominos have been conducting DRU pilots in various countries since 2016 they are yet to announce a commercial launch date.
As time progresses more companies are researching and developing automated delivery solutions.
This application of artificial intelligence in retail may not have been realised yet but it is only a matter of time.
The Influence of Artificial Intelligence in Retail Will Continue to Grow
Increasingly the role of artificial intelligence in retail is growing.
It is influencing all aspects of the retail industry from optimising manufacturing processes to streamline delivery and logistic solutions.
The influence of artificial intelligence in retail is also visible at the user end of the industry.
Increasingly personalised advertising campaigns and digital catalogues are being used to attract and retain customers.
Smart payment solutions are speeding up the purchasing process, making digital transactions safer in the process.
These smart payment applications are also slowly being rolled out in physical stores.
Automatic instore purchasing solutions means that customers will no longer need to queue up to pay for items.
Instead sensors will track their activity, automatically charging store cards as items are selected.
Many of the artificial intelligence in retail innovations that we have highlighter here are being driven by larger companies.
For example Amazon are seeking to pioneer small parcel drone delivery.
However many of these applications, such as easy to use payment solutions, can be also be used by smaller retailers.
By using artificial intelligence in retail applications to speed up payment processes or optimize marketing campaigns, smaller businesses can carve out their own niche in an increasingly competitive market.
This flexibility and willingness to embrace future solutions can help even the smallest business to thrive.
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