How Retail Is Being Revolutionized with AI

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How would it make you feel if businesses such as Walmart or Amazon could tell whether you had a cold or if they could figure out how much of an extrovert you are? In reality, there’s a chance they already know the answers to these questions, but this isn’t because they have cameras watching your every move.

These retail giants have been gathering information like addresses and purchases with the help of artificial intelligence (AI) for the past several years in order to get a very good idea of who their customers are. Indeed, AI-driven software has embedded itself into a number of retail processes and its use is only expected to expand further in the future. Here are three areas in retail that are being revolutionized by AI-powered software.

Customer Service

Customer service, the first area we’ll outline, is directly correlated with why Amazon could know so much about you. The data gathered about you hasn’t seen many changes in the past few years; however, due to AI, a lot more insights can be uncovered from that information. AI is able to pinpoint any patterns or relationships that occur in consumer data, like previous purchases, in order to make conclusions about customers that humans would never have been able to do. That customer behavior analysis provided via AI has proved quite beneficial in trying to boost customer service in a number of ways.

The first thing worth pointing out is the fact that personalization lies at its core. In fact, by getting to know more about their customers, retailers are able to use that information to offer customers a shopping experience that caters to their specific wants and needs. Take, for instance, North Face. This company uses an AI bot to assist customers in finding the items that they are looking for online quickly and easily, getting rid of the usual, tedious task of going through the whole catalog of a site.

Amazon’s website is the most notorious instance of an AI service that boosts customer service in retail. If you’ve ever felt as if your recommended items section was created by reading your mind, know that this was all possible thanks to AI-driven software. Amazon utilizes artificial intelligence to scrape data and evaluate a lot of consumer purchase information as well as customers’ search histories in order to figure out which items customers are looking for, or figure out which items they could potentially like that they hadn’t even known about.

Supply Chain Planning and Pricing

Since artificial intelligence is able to make a solid consumer behavior forecast, that data can be utilized by retailers to assist with perfecting other parts of their company as well. In addition, by having a good understanding of customer behavior, companies will have a good understanding of what their future sales will look like, too. In fact, both the predictions and the forecasts provided via AI can change how retail is done in the background.

Inventory management in particular is a part of retail that can really benefit from AI-driven software. Typically, supply chain management depends on educated guesses made by experienced professionals. As a result, errors are bound to occur, so companies end up purchasing too much of an item at the wrong time or they don’t have enough stock and thus they miss out on sales that the company was depending on. However, advanced algorithms are able to predict sales with a lot more accuracy than humans will ever be able to do as they can uncover possible flaws in the supply chain as well as offer reliable recommendations.

AI-driven software can also help out with price optimization. For retailers, it’s becoming more and more difficult to set the right prices for items. Retail giants have to make changes to thousands of product prices multiple times per week or, in some cases, multiple times per day. Smaller ones are faced with the challenges that come from operating in a dynamic market, which is made even more difficult when they don’t have all the resources they need to re-price products at a fast enough pace. For retailers at either end of the scale, price optimization software can end up being a very good investment, offering businesses accurate price recommendations and letting them re-price products at the right time.


The thing is, though, AI does not only impact e-commerce. A lot of brick-and-mortar retailers have been using valuable customer data that has been gathered and evaluated by AI-powered software, giving them a competitive advantage. AI is a great way to boost other kinds of high-tech solutions that stores use, like beacons; that way, retailers can figure out why customers are coming in and provide them with their own personal notifications when they do. For instance, a customer with a membership, who gets exclusive offers, could get even more of them via AI as the retailer could provide personalized offers for, say, a family member’s birthday that’s coming up, based on information that AI has extracted and linked to that customer’s account.

The collection of in-store personalization has provided retailers with the opportunity to create a unique atmosphere in their stores, one that simply can’t be created online. And the opportunities that brick-and-mortar stores can realize with AI are never-ending. For instance, in the future, we could see billboards change based on who is looking at them, through the use of facial recognition (i.e. altering advertisements based on the gender of the potential customer). This feature is currently being tested in certain markets.

AI is all over the place in retail, and it won’t be leaving anytime soon. Although there will be many conversations surrounding all that AI-driven software has to offer, including why retailers should be using it or what kind of data should be gathered about consumers, the most important fact is that AI can and will be used to optimize numerous parts of retail. Although many people are wary of how AI operates, it’s no mystery that through AI-powered software, retail will be transformed.

Nikolay Savin is the head of price optimization product at Competera. He brings eight years of experience in supporting technology businesses and entrepreneurship in Europe and the Silicon Valley, with a focus on building products for retail revenue growth. Savin is passionate about sharing stories on technologies and innovations for retailers to help them grow.

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