5 AI Trends that Are Changing the Face of Retail

Srushti Shah
Srushti Shah

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Some retailers have been quick to embrace technological advancements, particularly in artificial intelligence (AI), and have reaped the benefits in terms of revenue and growth.

User making a retail purchase using AI powered chatbot

According to a report by McKinsey, companies that adopted AI in at least one business function — like marketing and sales or human resources — saw an average revenue increase of 66% in 2019. That’s a 3% increase from 2018.

Of course, there are risks associated with AI and some companies are slow to adopt this technology as a result. But it will continue to shape how we shop, how we receive health care, and many other aspects of our lives.

Below we’ll take a look at the five main AI trends changing the future of retail.

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1. AI Chatbots: Humans vs. Robots

Chatbots — those fun virtual assistants that pop up in apps or websites — may not be the latest innovation in AI technology, but they’re among the most popular. This is because they can easily automate routine questions from customers and they’re up and running 24/7. Imagine the relief that customers feel when they don’t have to wait on the phone to cancel their order, get a refund, or even ask a simple inventory question.

But, the traditional version of these chatbots is more like a decision tree, programmed to give answers to questions that you have “trained” them with. And that’s it. If a customer happens to ask something you haven’t accounted for, they won’t be able to figure it out.

That’s where true AI entered the game.

The best AI chatbots use advanced technology, including machine learning and natural language understanding (NLU). They can actually learn on the go, and refine their answers based on data from customer conversations and understanding intent. They can also use sentiment analysis, and gather and analyze data to provide insights in consumer trends.

This would allow your business, for example, to know where your visitors are coming from, what they’re looking for most often, which pages they linger on, and so on. Another huge benefit is personalization — offering suggestions based on each customer’s browsing or purchase history, or general online behavior. According to Accenture, 91% of consumers are more likely to shop with brands that offer relevant and personalized recommendations — so this chatbot function can help you grow your brand and revenue.

To reap some of these benefits for your business, look for software that will allow you to quickly and easily launch a chatbot on your website. For example, Acquire’s chatbots — part of a powerful customer experience platform — can help you increase engagement and revenue as well as automate a good chunk of your support operations.

2. Visual Search: Shop What You See

Visual search is like keyword search with images. Instead of people having to think about how to search for a product in Google or another search engine, they can just take a picture, upload it, and look at what comes up. This AI-powered feature recognizes and matches items based on what the user wants to look for.

Trending AI projects like this actually solve a problem for consumers. Imagine seeing someone wearing a jacket you’d buy, but you don’t know how to describe it accurately with words. With visual search, you take a picture and that’s it. The results are easier to scan than text, too, which makes it easier for customers to buy the product.

A common example of visual search is Pinterest Lens. When you’re on the Pinterest app, you can take a picture of anything and Pinterest will help you find relevant items. For instance, if the customer points their camera at an ingredient, the app will show them recipes. Because this visual search function was so successful, Pinterest recently launched a “Shop” tab, that shows shoppable pins based on in-stock products the app identifies.

Many other companies have tried this new AI technology as well. Google recently launched an upgraded visual search tool (using Google Lens) that helped users find items they photographed in online stores.

User tapping and holding an image so Google Lens finds a similar yellow top with ruffle sleevesThe technology isn’t perfect, and adoption is still on the low side. According to The Intent Lab, a research partnership between Performics and Northwestern University, only 36 percent of consumers have ever conducted a visual search. But, the future looks promising, and retailers that experiment with it are likely to reap the rewards first.

So, how do you jump on the visual search train? If you have the resources, you could build a visual search app yourself or via a partnership with a specialized company (like Tommy Hillfiger did back in 2017). In the short term though, it’s important to optimize your mobile site for visual discovery to ensure your images will show up when customers search for an item in Google. That means high-quality images, proper markup, image alt text, and more.

3. Augmented Reality: Look Up Close, From Afar

Augmented reality (AR) is arguably the most impressive AI trend in retail and ecommerce. Customers being able to actually inspect products in 3D — instead of just looking at pictures — is helping to bring the brick-and-mortar store fully online. Especially during and after the pandemic, this trend is expected to continue rising in popularity.

The most easy-to-describe use case is furniture. Most of us have bought a piece of furniture online, no matter how small. Even when the pictures were detailed, there was likely still a lingering feeling of doubt. Is it going to fit in my living room? Is it the right color? Does it truly match my other furniture?

AR in retail is meant to answer all these questions as accurately as possible by superimposing a product to a place or body. As such, it promises to improve the digital customer experience — and possibly reduce product returns.

In fact, 66% of consumers said that 3D and AR would increase their confidence that they’re buying the right product, and that they’d be more interested in shopping on a website that offers that option. 42% would be willing to pay more, too.

That’s why many companies are already paying attention to AR and applying it to social media marketing and other business efforts. In collaboration with brands such as Volvo and Porsche, Google is experimenting with an AR feature for cars. Other brands have already tried their hand with AR filters on social media. L'Oréal Paris, for example, tried an AR filter for virtual makeup as a way to engage younger customers who spend more time on social apps.

Image taken from L’Oreal Signature Faces

Image Source

It’s worth considering how you can use this AI trend in retail. A partnership with a social platform or a native app could be helpful in attracting and retaining your customers. Shopify AR may also be a solution to start with, if you’re on Shopify.

4. Artificial Design Intelligence: From Machines With Love

Artificial design intelligence (ADI) is a really cool idea. What this type of AI does is build websites — all on its own and in record time. It does this by using input from humans to understand what the deliverables are, and then it...well, delivers, by applying trends and data to create the most relevant design.

This is arguably the AI trend most in its infancy. AI-powered design has been tried already, but the results still lack the complexity of human-made websites in terms of functionality, SEO, aesthetics, and more.

But as it improves, it’s going to be very helpful, especially for retailers. New websites will be up and running in minutes, and ecommerce designers will be free to try more creative ways to engage customers instead of dedicating time on the technical aspects of building a website.

If you want to be an innovator in this aspect, look into companies that offer AI Design Assistants (AiDA). With time, the technology of these machine learning trends will get more sophisticated and bring real business value.

5. Predictive Analytics: The Third Eye of AI

The predictive aspect of AI is incredibly useful in the era of data, and probably the most developed of AI trends. Instead of having huge amounts of data stored (often in data silos) and having your analysts tirelessly working to make sense of it, AI can take over.

Predictive analytics use machine learning and other data analysis techniques to predict the future. For retail and ecommerce, this translates into insight for the most important piece of information for the industry: consumer behavior.

This knowledge can support lots of actions and decisions. For one, it can feed recommendation engines, like AI chatbots. By predicting what consumers are interested in and are more likely to buy, companies can offer automatic suggestions to increase engagement and conversions. And that doesn’t only happen on the individual level. In addition to predicting purchases based on a person’s behavior, AI can also extract insights for different locations, countries, age groups, genders, and more.

Other uses of predictive analytics and big data initiatives include:

  • Reforming supply chain inventory management by ensuring that the retailer always has the right stock — not too little, not too much.
  • Conducting competitive research and monitoring pricing trends and product demand.
  • Understanding the types and quantities of products most bought, most ignored, most returned, and more.
  • Catching and dealing with various types of ecommerce fraud.
  • Analyzing the market to provide ideas for marketing and advertising campaigns (e.g. email marketing).
  • Measuring the effectiveness of existing promotional efforts and analyzing website performance.

For example, Walmart started using big data analytics years ago for various reasons, including optimizing the supply chain and personalizing experiences. More recently, AI analytics has been used to achieve a fully omnichannel experience by combining insights from various channels.

So, retail analytics based on AI can truly revolutionize your business — and can also help you make sense of the wealth of data you gather to choose the right analytics to focus on. All that will result in memorable and streamlined customer experiences.

The Future of AI in Retail

From interactive chatbots to augmented reality, artificial intelligence (AI) presents retailers and brands with a wealth of opportunities to experiment with and benefit from. With the right investments and practices, your company can reduce costs in talent management, contact-center automation, and warehouse automation, among other areas.

Acquire is a conversational customer engagement platform that empowers companies to deliver exceptional experiences. By simplifying communication across touchpoints and tools, personalizing interactions, and enabling the ability to architect faster and more efficient processes — people, not channels, are put at the heart of customer service.

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