Retail Industry witnessed major changes and developments in recent years by including various technologies to improve the relationship between the retailer and the customer and creating value to the customer. Artificial Intelligence is the recent buzz word in the field of the retail industry. The major reason for adapting AI in retail is to build customer experience, customer satisfaction, digitalization, improvement of the technologies, and also the competitors in the market.
The following figure depicts the benefits of artificial intelligence for retail business worldwide in 2018.
Artificial intelligence in retail is being applied in new ways across the entire product and service cycle—from assembly to post-sale customer service interactions. Here I have listed a few areas in retails was AI is used.
Sales and Customer Relationship Management: Every retailer’s objective is to increase the sales of the company by grabbing the attention of the customer and to retain the customer. Many retailers use the customer’s past data to analyze customer behavior and their buying pattern. This information’s are useful to predict consumer demand. Based on customer behavior, AI enables retailers to offer a personalized for every customer. A chatbot is a technology which is used as a customer-care assistant. It understands the queries from the customer and responds accordingly. Most of the retailers use chatbots to enhance customer experience. Humanoids are also used to grab the attention of the customers. One such humanoid is called Pepper. It interacts with customers and understands human emotions.
Delivery and Logistics: Major problem faced are during delivery some shipments get misdirected, some shipments get stuck and cannot be traced and transportation issues. AI plays a major role here to reduce these kinds of problems. If AI is implemented in this field, we can predict the demand, plan and align the operations well in advance, eradicate the shipment delay and predictive maintenance can also be done so that there will be no repair in the vehicles when they take the products out for delivery. AI is also used for creating optimized route planning and the entire supply chain planning efficiently.
Inventory Management: There are many challenges in managing the inventory. Few are failing to keep track of inventory, stocking excess/fewer products, difficulty in finding the demand patterns. These problems can be minimized by incorporating AI in inventory management. Using AI inventory monitoring can be automated. AI also analyses the customer data and it is used to predict the demand from the customer which reduces over/under stocking problems and also reduces the forecasting errors. Robot Automation is another technique which is used to check, fulfills, and restock inventory. In Amazon, user demand, supplier backorders, warehouse optimization, stock levels are all being guided by either machine learning or more complex artificial intelligence systems.
Amazon Go is a convenience store which is partially automated. The customers can purchase products without being checked out by a cashier or self-check-out station. Customers should have amazon go app on their smartphone and they should create an amazon account and they should add their bank account details to it. Once they enter into amazon go, if a customer takes an item off the shelf it will be added to the virtual cart and if the customer places back it to the shelf then it will be removed from the virtual cart. These actions are done with the help of the cameras and sensors placed in the self. If the customer moves out of the store, the bill amount will be automatically detected from the bank account. This reduces the waiting time of the customers during billing and overall enhances the customer experience.
The below figure shows the list of AI and ML algorithm which is used in Retail Industry.
AI is a boon to retailers and it will transform the retail industry. AI technology has evolved at an astronomical rate. Artificial intelligence can serve retailers with smart recommendation engines, automate most processes, replace human labor for particular tasks, predict demand, and by doing these things increase overall productivity and revenue.
Author: Haritha Thirumalairajan. MBA – Business Analytics student at CHRIST(Deemed to be University).
