AI in Retail: The 5 Ways It Can Empower Businesses

Artificial intelligence (AI) is rapidly transforming a lot of industries, and retail is no exception. By incorporating AI technology into retail, businesses get to revolutionize their operation through streamlined internal processes, automated customer service, and so much more. Not only can this boost productivity, but it can also enhance customer experience, establishing a better brand image.  

With this, the global value of AI in the retail market has reached $7.14 billion in 2023, according to Fortune Business Insights, and it is expected to grow at an annual rate of 31.8%, reaching $85.07 billion by 2032, reflecting the increasingly widespread adoption and growing potential of artificial intelligence in the retail industry.

How are Businesses Combining AI and Retail?

So how exactly is AI used in retail? Common applications range from customer analysis, shopping personalization, automated service, to operations management, and even in-store security.

Customer Analysis

The data produced by daily transactions, including customer purchase history, demographics, retail in-store footfall and heatmap, can offer a goldmine of insights, but analyzing them manually can be difficult. By leveraging AI, retailers can tackle this challenge head-on and go through a vast amount of data in the shortest period of time.  

To maximize the benefits of data-driven strategies, retailers can invest in UBX-510SL mini edge servers for each chain store to enhance operational efficiency and loss prevention. These edge servers provide real-time data processing and decision-making, crucial for applications like video surveillance and inventory management. They reduce network traffic and operational costs by optimizing bandwidth usage and maintaining local data storage, which bolsters security and compliance with data regulations. Additionally, edge servers ensure reliability during network disruptions and provide scalable, flexible deployment tailored to each store's needs.

Shopping Personalization

AI can be used to create a more engaging experience for each customer. For instance, just by analyzing a person’s purchase history and browsing behavior, AI can curate a personalized product suggestion list, saving the customers’ hassle and frustration of browsing items one-by-one.   

Additionally, AI goes beyond online experiences. In-store, AI-powered smart fitting rooms use cameras to recommend clothes that flatter a customer's figure, while smart mirrors allow virtual try-on, eliminating the need to physically change outfits. This gives the shopping experience a personalized touch and saves time as well! 

Automated Customer Service

According to Statista, up to 48% of retailers worldwide use AI for customer service. This is because AI can streamline customer support by providing 24/7 assistance through various channels. Some of the most common forms of this are the chatbots or virtual assistants you usually see on e-commerce stores and mobile apps. They offer immediate assistance by answering frequently asked questions, troubleshooting issues, and even directing customers to the appropriate resources. 

Retail operators also use voice AI-activated self-service kiosks to assist customers with finding products, checking prices, and obtaining information about additional service options. With the integration of Advantech UTC's all-in-one touch computer and virtual assistant application software, these AI-powered kiosks can even answer customer queries, provide product recommendations, and assist with orders to create frictionless customer services.

Operations and Inventory Management

Traditionally, managing inventory relied on past sales data and intuition. On the other hand,  integrating AI in inventory management can enhance accuracy, efficiency, and operational effectiveness. With AI-driven demand forecasting, automated stock replenishment, and real-time inventory monitoring, retailers can optimize stock levels, reduce excess inventory, and prevent stockouts.  

Moreover, Advantech’s employee communication touchscreen computers and digital signage solutions in modern retail warehouses further streamline operations by facilitating real-time information sharing and coordination among staff.  

With Advantech vision AI technology, retailers can also ensure critical area access control, thus enhancing security and reducing the risk of fraud or theft. The server system also supports secure, low-latency data processing to enable informed decisions and improved warehouse management. By leveraging these advanced technologies, retailers can achieve a seamless, integrated approach to inventory management, driving profitability and customer satisfaction.

In-Store Security

Retailers face a constant challenge in protecting their inventory and assets. A survey conducted by National Public Radio revealed that retailers have faced an estimated loss of $112 billion due to theft. AI-powered video analytics offer a powerful solution by enabling intelligent video surveillance, which goes beyond simple recording, as it analyzes video feeds in real-time to detect suspicious activity such as shoplifting or vandalism. 

For example, retailers may use AI to identify patterns of behavior that might indicate potential theft, such as someone lingering near a high-value product or concealing merchandise. Upon detecting such activity, the system will then trigger alerts, notifying security personnel for intervention. 

What’s more, AI can also be used to deter fraud at the checkout line, as it can analyze video footage and recognize suspicious actions like bill switching or coupon misuse, helping cashiers flag potential fraud attempts to prevent financial losses.

What are the Benefits of Using AI in Retail?

As you can see, the application of AI in shopping and retail translates into significant benefits for both retailers and customers, which includes:

Data-Driven Decisions for Enhanced Profitability

By leveraging AI for market analysis, retailers gain a deeper understanding of their customers, competitors, and the broader market. This empowers them to make data-driven decisions about everything, from product selection and inventory management, to marketing campaigns and pricing strategies. Ultimately, these well-informed decisions will result in greater efficiency, reduced costs, and increased profitability.

Enhanced Customers Engagement for Higher Satisfaction

The use of AI-powered product suggestions, smart fitting rooms, virtual mirrors, and interactive kiosks makes the shopping experience unique for each customer, creating a sense of engagement that traditional retail stores often lack. With this personalized touch, customers will be even more satisfied, allowing retailers to establish a better brand image and boost sales.

Seamless Multi-channel Experience

Nowadays, customers expect a unified experience regardless of the channels, whether they shop online, in-store, or through a mobile app. AI can bridge the gap between these channels, by synchronizing inventory levels across online and physical stores. This improves fulfillment efficiency while ensuring that customers have access to the products they want, no matter what channel they choose to shop from.

 Optimized Logistics and Supply Chain

Using AI to predict can prevent stockouts that frustrate customers and also minimizes the need to store excess inventory that ties up capital. It can even prevent spoilage and loss that may be caused by overstocking.  

Moreover, by optimizing delivery routes, AI can help retailers create an efficient order fulfillment process, allowing them to enhance customer satisfaction and streamline operations.

Prevent Financial Loss

With AI-powered video analytics, retailers can create a safer shopping environment for both customers and employees. This technology deters criminal activity, such as theft, vandalism, and fraud, reducing inventory shrinkage and associated financial losses. Even if such events do occur, AI systems can provide evidence with high accuracy for investigations.

Examples of AI in Retail by Leading Brands

With these benefits in mind, we will now showcase several use cases of AI in retail and see how leading brands put these concepts into action.

Amazon: Automated Store & Voice-Activated Shopping Assistant

Amazon Go is an innovative chain of cashless grocery stores that leverages a variety of AI technologies, including computer vision and sensor fusion. Shoppers simply have to walk in, grab the items they were looking for, and leave. The cameras and sensors will track the items taken and automatically charge the customers once they exit the store, eliminating the need to line up and pay. 

Amazon's voice assistant, Alexa, is another powerful example. Alexa integrates AI to understand spoken commands and answer questions, allowing customers to search for products, add items to carts, and even place orders directly through voice interaction. This hands-free approach to shopping reflects the convenience that AI can bring to the retail experience.

Timberland: Virtual Try-On Technology

In 2014, Timberland partnered with Lemon&Orange to create a virtual fitting room experience for customers at the Mokotow Gallery in Warsaw, Poland. They leverage AI technology that tracks body movements and gestures in real-time, letting customers try on various items from Timberland’s newest collection, including jackets, sweaters, trousers, and shoes. This allowed customers to conveniently experiment with different outfit combinations, creating an engaging and memorable experience.

Home Depot: Self-Service Checkout Systems

Home Depot, the home improvement giant, offers self-checkout options powered by AI.  These systems utilize AI for item recognition and weight verification. Customers merely have to place their items on the kiosk, whether it's a small box of nails or a basket full of heavy tools, then let AI do the rest. The system will instantly identify the product and ensure accurate billing, eliminating the need for manual scanning by cashiers. This optimizes the checkout process and reduces wait times for customers, creating a win-win situation.

The Future of AI in Retail

The Limitless Potential

The potential of AI in retail is only beginning to be explored. New technologies and trends will continue to emerge and shape the future of retail. One of the things we can expect is the soon-to-be heightened level of personalization. Leading companies like Advantech have created hyper-personalized solutions, such as ObjectVA, to identify the products held by customers. Based on this, the system can trigger targeted advertising with interactive signage, promoting related products or offering personalized discounts to engage the customers even further.  

Retailers may even choose to take this a step further by incorporating the use of face recognition technologies like FaceMatch. Imagine a customer walking into your store to be greeted by name or receiving special loyalty program benefits made just for them. They can get whatever they want with minimal effort. Plus, this facial recognition AI can even be combined with the staff’s access systems in stockrooms or other areas to enhance in-store security. 

Furthermore, the prevalence of AI monitoring systems, such as Advantech’s PeopleCount can help retailers track the number of people entering the store, dwell times in different areas, and also abnormal crowd activity. With this data businesses can optimize staffing levels, improve store layout, and ensure a smooth shopping experience for their customers.

Ethical Considerations and Possible Challenges

While the potential benefits of AI in retail are vast, it's crucial to address the potential challenges, as AI algorithms are only as good as the data they are trained with. If the data is inaccurate or biased, these flaws will be reflected in the AI system. Thus, retailers must train their AI algorithms with factual and diverse datasets, to avoid unideal outcomes. 

Besides, as AI plays a more prominent role in retail, it's also crucial for retailers to be transparent about how AI is used to avoid privacy issues. Customers have the right to understand how AI is influencing their shopping experience and how decisions are being made. 

By acknowledging these challenges and implementing AI responsibly, retailers can harness its power to create a future-proof and ethical retail environment that benefits both businesses and customers.

Advantech - The Top AI Solution for Retail 

AI in the retail industry is no longer a vague concept of the future, but a vivid innovation that exists in the present. By leveraging AI for data-driven marketing campaigns, enhanced customer experience, optimized logistics, and strengthened security, retailers can gain a competitive edge in the fast-paced industry and create a sustainable business model that can also satisfy the customers.

With Advantech’s AI powered solutions, you can unlock the full potential of this technology and transform your business. We offer a comprehensive selection of products specifically designed to empower retailers, including All-in-One Touch Kiosks, powerful and compact edge computers and servers, and so much more. Explore more sophisticated AI solutions at Advantech today!