What Is AI in Retail?
AI in retail involves the use of automation, data, and technologies such as machine learning (ML) algorithms to deliver highly personalized shopping experiences to consumers. AI can be applied to consumer experiences in both physical and digital stores.
On a website, for example, AI-driven chatbots or virtual personal assistants give shoppers a personalized recommendation or dynamic pricing based on their behavior on the site, purchase history, and other relevant data. AI use cases in retail abound in physical stores as well, leveraging data sources such as customer in-store interactions on mobile devices and by sensors. Retail store managers can even use AI to optimize store layouts by training an algorithm with sales data and other relevant information. This helps predict outcomes such as a person’s likelihood to buy two items together if they’re displayed next to each other.
Why Does AI in Retail Matter?
Physical stores remain king in retail, but must navigate hyper-competitive environments. Likewise, digital stores operate in a marketplace where competitors are just a click away. Retailers can use AI to revolutionize the consumer experience and gain the transformative edge they need to stay relevant.
AI in retail settings can power personalization and help keep retailers agile, for instance, using AI-driven demand forecasting to optimize inventory.