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6 Applications of AI in Retail Sector

  • Muskan
  • May 12, 2021
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Not to mention the e-commerce industry is really flourishing as technology is evolving each and every day but there remains this truth that nothing can replace the presence of retail stores even for the most famous and well-established online brands. 


People still wish to see for real and test and try the products before purchasing them. Not just this retail stores are also a good place for brand endorsement and reinforcement of the offers and discounts personally. 

Like its quoted technology is literally everywhere, and so is Artificial Intelligence and its applications even the Retail stores have been on the list too, a lot of retail stores are using AI mechanisms to function efficiently and without investing in too much human labor. 


Let's have a look at how this operates. 


What is Artificial Intelligence?


Artificial Intelligence is described as the actions of machines accomplishing tasks that historically required human intelligence. This concept of Artificial Intelligence can be traced back to Greek mythology, but only during modern history, the world witnessed the development of stored-program electronic computers. It's a web of millions of algorithms and codes. 


Facebook’s list of suggested friends for its users, a pop-up page telling you about an upcoming sale of your favorite brand of shoes and clothes, that comes on screen while browsing the internet, is the work of Artificial Intelligence. AI technology helps in analyzing data and thus can improve efficiency in every sector it is used, taking from Marketing, power management in cars, devices, weather predictions, and many more such industries.


The AI market will see a boom in the coming future. Industries are using it to generate more profits within the same threshold with higher efficiency. In India particularly we have seen that government-mandated NITI Aayog will be establishing the NATIONAL PROGRAM ON AI with a view to guiding research and development in new emerging technologies of AI.


Recommended Blog: History of Artificial Intelligence 



AI in Retail Sector


In this fast-growing retail industry, the retailers need to re-examine their policy till now as the market is changing too rapidly. They need to introspect what they are doing, how they are doing, and how they are developing their product in this modern world of Digitisation and Intelligence.


We have seen how the E-commerce Industry had once disrupted this age-old traditional industry, especially in India where the retailers now rely on these platforms for their product’s sale. This time it's coming in the form of Artificial Intelligence which will be a boon for this retail industry once taken up with full enthusiasm.


The efficiency of AI will pave the way for retailers by becoming smarter to provide customer satisfaction, better services, better response to customer demands, and supply to be in competition in this era of Artificial Intelligence and Big Data. Whether Online or offline, AI can accommodate vast complex data from enormous sources; images and videos, and customer behavior and response which will revolutionize this retail industry.


AI Applications in the Retail Sector


Globally the AI market has witnessed massive start-up enrolment. These key players are collaborating with industries to offer customized AI solutions for business growth at a faster pace than it is now. The retail industry has not been far from this. It has been implementing AI-based systems to cater to several functions. 


Recommended Blog: Difference between AI and Human Intelligence 



  Image Showing AI Applications in Retail Sector  1) Cashier Free Stores 2) Chatbot Based Solutions 3) Price Regulation Strategies 4) Virtual Trial Rooms 5) Product Categorization and Inventory Management 6) Feedbacks and Prediction

Applications of AI in the Retail Sector


1. Cashier Free Stores

By cutting down employee compensation and increasing efficiency and reducing wait time robotization of stores had significant savings on operational expenses.


Amazon AI is one of the examples where they introduced checkout-free stores. The Amazon Go and Just Walk Out shopping technology works when you pull something out from the shelf or put it back when you walk out of the shop with your products, the amazon account will deduct for your purchase within a fraction of seconds. With this technology, Amazon is now widening its reach where only six to twenty human staff members are needed instead of a full organization.

In other cases, there are machines which will tell you the amount of the things you have purchased by scanning the barcodes of them and they are also equipped with the systems to be able to accept the digital modes of payment, this makes the transaction complete almost without any human communication. 

Decathlon and Mc Donalds have installed automated checkout machines throughout their outlet and stores in India. 


2. Chatbot Based Solutions 


With the introduction of AI chatbots, it's much more convenient for businesses to target customer needs and solve their problems in an efficient and transparent manner. AI chatbots provide a higher level of customer service, send notifications about new collections, and suggest similar products.


If a customer has already shopped a pair of black jeans, a chatbot can suggest a snapback to match and the look is complete. Eighty percent of brands worldwide are already using or are preparing to use chatbots in near future. 


These work by popping up in the websites and in the retail stores can really turn out helpful to solve the on-ground queries of the people like what's where and the price of the products if they happen to miss out seeing that. Tommy Hilfiger and Burberry as well as smaller brands than have installed chatbots to help their customers see through their collections.


3. Price Regulation Strategies 


AI technology for retail stores has helped businesses set prices for their products more competitively to thrive in the market. It visualizes the likely outcomes of multiple pricing strategies. It reads data within seconds from the business’s earlier transactions and from the market for the product’s actual cost, promotional activities, and sales figures in the market and keeps its par for generating profits within the same threshold with higher efficiency.


Business leaders can present the best offers and get new customers onboard hence creating a new customer base at the same time. eBay and Kroger already apply Artificial Intelligence for their price optimization and stay flexible with their ability to adjust prices and promotions according to information obtained.


Price forecasting is one such benefit of Artificial Intelligence. AI reads and interprets the statistics according to demand, seasonal trends, characteristics, customer choices, the release date of new models of the same items, etc. AI has provided a new horizon to keep businesses at an edge over their competitors by helping the customer base know beforehand how the price for a certain product will change with Artificial Intelligence, this is possible and easy to implement.


This technology could help the retail industry build customer loyalty.


4. Virtual Trial Rooms 


A new trend and a new way of shopping especially at a time of covid which gave this technology a big boost. These virtual trial rooms help customers save time, save money from travel expenses, and from the convenience of your home, the customer finds the perfect outfits with all elements perfectly matched in just minutes.


Even in stores like Levis, Gap, Brooks Brother, Old Navy, and others installed AI scanners and received enormous sales within the same customer base by giving them a real-time picture of what would suit them. 


They work by having the image of the customers in the stores and they can select the apparel which needs to be tried on making one have a realistic picture of the outfit without even literally trying it. This makes the entire process really convenient and effective without too much in-store mess. 


5. Product Categorization and Inventory Management


AI-based technology combined with other algorithms of machine learning can help the stores regulate and keep a check on product categorization so as to be able to guide the people looking for a specific kind of product head to the right space of the store instead of rummaging through a lot of unwanted products. 


This can also work with regard to having an image of the product in-store to be able to get the idea and the location of the same product with its details, price and even size availability this would not just help in saving time but it also would help in getting the real-time inventory to the store to bring in the required stocks each day to not miss out a customer. 


This can help in the retail stores so as to be able to get all the products piled up ready for sale in their inventory timely, this must not be avoided. keeping the stocks in a retail store becomes important as this specifically needs time investment from the customer to be able to go and shop. 


6. Feedbacks and Prediction 


The electronic devices which have been installed are likely to ask about the customer experience after they are done with the sales and payments. As nowadays all the customer details are noted to update them about upcoming offers and sales it gets easier for the stores to ask for feedback and calculate their customer satisfaction using Artificial Intelligence techniques and have ample room for improvement in time. 


This also helps in understanding the prediction of the customer based on their past purchases,  preferences, and sizes and makes them have updates on the recent products offered on the specific products only that too store wise and location wise. This will not just cause them to have a personalized experience but also makes the entire user experience be automated and efficient. 


Recommended Blog: Is Artificial Intelligence Really Intelligent? 




This is a fact that no human involvement can be replaced by machines yet this is of gradual attention that machines and Artificial Intelligence have made them effective. Their algorithms have been proven to increase sales and effective involvement of the customers, making them eradicate the tiredness of offline and selective shopping.

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