How Artificial Intelligence (AI) Can Help Retail
Will AI change the game for retailers?
Over the last few years, artificial intelligence technology has made some interesting advancements across multiple industries. While it may not be so obvious to the end consumers, artificial intelligence has been applied in the retail sector as well. Even though not every retailer has been using it due to high costs, inaccessibility, and proprietary systems, the largest players in the retailing have been pretty active about it. It's no wonder given the benefits AI can bring to the actual businesses.
How Artificial Intelligence (AI) Can Help?
So how exactly can artificial intelligence help retail store owners? First off, let's say a few words about how AI and machine learning work. Namely, artificial intelligence technology takes a big data set about something, runs it through AI algorithms such as neural networks and then produces a model which can provide answers like a real human. The answers that are given are based on whatever AI was able to learn about the matter from the dataset.
As it's probably obvious at this point, the dataset that AI learns from in the retail industry example is the actual sales data linked to the customer data. When this information is run through the machine learning algorithms, an AI model is produced which discovers actionable information about a business, customers, and inventory which are not normally obvious or known to the business owner. With this in hands, a retailer can do a variety of things to benefit his own business.
For example, retail AI can learn about customers, their preferences, and their behavior to get to know them. And, in recent years, it can get to know them so well that it knows what they need and when they need it. And it knows this before even they do. When AI is capable of producing such information on the fly, numerous benefits can be obtained immediately for the business cash flow and the general experience. First one is to get the customer to buy more. If AI knows what they need before they do and issues them a coupon for a given product, this will trigger them to buy an additional item which they didn't come for while generating extra revenue for the business.
Another benefit would be improving your customer's experience because if you offer them exactly what they need at a better price, you start building a personal selling relationship with your customers.
Another area where retail AI can help greatly is how items are physically laid out in the store. We've all heard stories about how big retail chains order items to get us to buy more. And we probably all think there is some magic formula by which we can display our inventory and get our customers to buy more. However, there is no such formula. Even the same store with same items but on different location can have completely different triggers for its customer base. So there is no one-size-fits-all solution here.
However, what is available is the artificial intelligence technology which can help with this.
When provided with the sales data, machine learning can discover patterns in your customer's buying preferences and learn what they buy together. Based on this, AI can provide you with suggestions on what items to put next to each other in your store to get your customers to purchase more. And since those suggestions are based on real data provided by real customers that are buying in the particular store, they are certainly guaranteed to deliver results and trigger your customers.
There's a lot more AI can do for retail businesses. The examples listed above are just the tip of the iceberg. Whatever part of your business, you can provide data for; AI can extract really valuable insights which are to be treated like gold. It can be used to improve your inventory turnover, optimize your stock, predict future revenue, and a lot more.
There is one catch. Namely, with the things as they are, Artificial Intelligence systems are mainly proprietary and available only to big retail chains having big technology budgets. It will be interesting to watch this space over the next few years to see solutions coming out, which will be crafted more for small retailers than the big ones. Some companies have already started this development so it won't be long for the independent retailer to have access to the same tools as the national brands.