The Future of Retail in an AI-Powered World

By September 15, 2020Blog Posts
The Future of Retail in an AI-Powered World

With each new day, we wake up to a world where Artificial Intelligence is used in a more effective way. We see AI solutions that are becoming widespread in various industries. And retail is among them.

AI adoption in retail has been on the rise for a while. Retail is transforming into a highly digitalized industry with increasing tech investments, and the COVID-19 outbreak has accelerated this process.

With the sudden expansion of the pandemic, many countries declared a quarantine. Because of lockdowns, physical customer service points were no longer available. This forced the retail industry to search for alternative service channels for their customers and AI stepped in as an effective solution. Many retailers applied for AI-based solutions like chatbots and voice IVRs to handle an unprecedented volume of communication traffic with their customers.

The new normal for retailers

Before the pandemic, the retail industry was already ripe for innovation, as the convenience and speed of online shopping surpassed innovation on the main street. The COVID-19 outbreak has accelerated the change in shopping behavior, especially positively affected the online channels. Today’s consumers are no longer single-channel shoppers, and this requires businesses to maintain more fluidity between online shopping and physical stores.

Artificial intelligence solutions help retailers make smarter, more profitable decisions by understanding and predicting the customer journey in physical locations. With AI-based applications of people counting, queue management, heat maps, demographic analysis, and real-time occupancy, retailers can monitor data on their physical location and directly improve the efficiency of their operations and their shopping experience.

How is AI transforming the retail industry?

The digital transformation of the retail industry has been going on for several years. Retailers develop new customer experiences by making AI part of their digital transformation. The below examples include innovative use cases of AI technology in the industry.

Stores without cashiers

Robotization of stores seems to lead to a reduction in the number of human employees, enhanced customer experience with no waiting in line for checkout, and significant savings in operating costs. For example, Amazon AI recently unveiled its checkout-free stores. The Amazon Go and Just Walk Out Shopping technologies react when you take something from the shelf or put it back with the help of various sensors. These sensors also work to process your purchase from your Amazon account when you leave the store with the products.

Chatbots are the new customer service assistant

AI chatbots provide a more efficient customer service experience, improve search, send notifications about new products, and recommend products on previous preferences.  Tommy Hilfiger and Burberry have already started using chatbots to help their customers navigate their collections.

In-store assistants

Retailers are also investing in technology to assist customers in the shopping process and staff in stores. Kroger Edge eliminates paper price tags in stores with its technology; they are now using smart shelf tags. This technology also has functions such as video ads, nutrition information, and promotional announcements on market screens. LoweBot, Lowe’s in-store robot, helps global customers find the products they need in their own language. Artificial intelligence technologies also help in inventory management thanks to their real-time tracking features.

Price regulations

Artificial intelligence applications for retail stores can help businesses set prices for their products and visualize the possible consequences of multiple pricing strategies. To do this, the system collects information about other products, promotional activities, sales figures, and additional data. Leading brands can offer their customers the best offers, gain new customers, and thus increase sales. eBay and Kroger are currently using AI for price optimizations.

Price predictions

Price prediction is an estimate based on the demand, seasonal trends, features, release of new models of the same product. It helps customers know in advance how the price of a particular product will change. The price prediction feature can help businesses build customer loyalty. However, predictive analytics and machine learning in the retail industry can accomplish much more than a price prediction.

Supply chain management and logistics

Misapplications in supply chain management and logistics cause nearly $ 1.1 trillion in losses each year for retailers worldwide. Eliminating product surpluses and out-of-stock scenarios can reduce this loss.  The supply chain can be used for restocking — calculating the demand for a particular product by taking into account a history of sales, location, weather, trends, promotions, and other parameters. Morrisons has made a better situation with stock forecasting and replenishment in 491 stores with the help of BlueYonder. It resulted in an up to 30% reduction of in-store shelf gaps.

Image search

Visual search systems powered by artificial intelligence allow customers to find similar products based on image uploads, colors, shapes, and patterns. American Eagle uses a visual search system technology that not only helps customers find identical or similar clothing but also makes suggestions for them.

Voice Search

Walmart, Tesco, Kohl’s, Costco, and many other major brands are using AI technology to provide customers with simple and fast voice searches. Now customers can track the requested item and the delivery status without typing. 27% of people worldwide use voice search on mobile devices, and 52% prefer it to mobile apps and websites for their convenience.


AI is transforming the retail industry. Thanks to high-level data and visitor analysis systems, companies are now able to make data-driven decisions that help increase sales, marketing efficiency, and revenue at each branch. None of these would have been possible without the help of AI. Artificial intelligence in retail empowered businesses to leverage advanced data to improve retail operations and find new business opportunities.

AI-based insights help retailers run a smarter business and enable them to monitor their customers’ shopping traffic as well as their future behaviors. As artificial intelligence capabilities develop; opening entirely new ways of doing business that can improve operational agility, quality, and speed of decision making. This also paves the way for delivering customer experiences that turn more of their traffic into revenue and minimize abandonment.

Author: Çağrı Doğan, Accessible Products Consultant, Sestek