Could AI Be the Next Big Thing For Your Retail Business?

Posted on July 21, 2020 by Michael Benarroch

Could AI Be the Next Big Thing For Your Retail Business?

Posted on July 21, 2020 by Michael Benarroch

More retailers are exploring AI technology as a way to personalize the customer experience and help them better target specific audiences and customers, not just while they’re in-store but through e-commerce, too. 

AI technology enables retailers to do this at scale with greater accuracy than they could through conventional manual processes, and without sacrificing the personal touch that forges deeper connections. When done correctly, AI can help retailers determine everything from what their customers want, to what the best time is to market certain products to those customers. 

But AI goes beyond the personalization phase. It can also help solve common challenges in retail operations, like forecasting and inventory restocking, that will allow you to better serve your customers.

The benefits of AI in your retail strategy

The retail industry as a whole spends roughly $49 million on AI technologies, dispersed between marketing, sales, customer service, and financial departments. That number is projected to climb to $12 billion by 2023 and is expected to include more aspects of back end operations. 

It’s not just bigger retailers that are embracing the benefits of AI, either. Smaller retailers can also tap into AI that can help them maintain a competitive edge in their respective markets, including the following:

Recommend products that matter to your customers

Personalization and timing are big parts of AI product recommendations. It’s not enough to carry products your customers want and need — retailers also need to be able to recommend the right products at the right time.

For example, clothing-as-a-service company Stitch Fix uses sophisticated AI to select fashions based on their customers’ previous purchases and interests. Customers take an initial personal style quiz to narrow their selections for their personal stylist, and with each purchase, the algorithm helps the stylist better understand the customer’s preferences. 

Beauty company Sephora leverages AI to match customer shades based on skin tone. Outdoor clothing company North Face has also implemented AI to help customers find the perfect jacket based on where the jacket will be worn and the activities the customers will be doing in the jacket (e.g. skiing, hiking, etc.). 

Retailers can create similar experiences on a smaller scale with the right technology investments. One of the most straightforward ways is to automate product recommendations via email or remarketing based on the user’s activities on your website or in their general browsing. You can also tap into augmented reality to help customers experience products before they buy them. For example, customers can “try on” items without visiting the fitting room (a major win post-COVID, too) or see how a certain piece of furniture might look in a room. 

Gain effective supply chain planning

Boosting back-end operations is essential to creating a better in-store customer experience because it allows retailers to operate more efficiently and pivot to shifts in the market. This could mean identifying gaps in the supply chain that will impact product pricing and availability, both of which will affect your shoppers. It could also allow for building resiliency in your business that will allow you to weather unexpected shake-ups like COVID-19 so that you can continue serving your customers. 

Retailers can use AI to accurately monitor inventory levels and forecast future needs based on previous sales data and ongoing consumer behaviours in real-time.

A recent IBM report noted that 85% of retail companies are planning or will already be using AI to improve supply chain planning by 2021.

Tap into new customer markets

As a general rule, machine learning and AI allow retailers to learn more about their customers so they can predict and prepare for future behaviours. AI enables this knowledge collection, sharing, and understanding on a broad scale so that retailers can personalize their offers and messaging, along with choosing future products and services to bring into the store.

How to implement AI technologies as a small retailer

Though some AI and machine learning technologies can carry a hefty price tag and are often associated with larger companies, these benefits are not completely out of reach for smaller retailers. 

To get the most from your investment, you’ll want to prioritize the following components:

Consider the total customer journey

AI and machine learning are being explored across the retail supply chain and in both back end and front end store operations. It should also take into account the total customer journey, from how they discover your store to how you stay connected with them after they make a purchase. 

Don’t sacrifice the human element

For all the “hands off” benefits that technology brings, retailers should know that it can never fully replace the human element. Even though online channels and digital technology have won over shoppers, many still prefer the human interactions that come with shopping in stores. They enjoy the ability to ask questions and engage with retailers, and retailers need to understand the nuances of human interactions so they can better deliver on customer expectations.

Human intelligence will always be critical to artificial intelligence, and many technologists recommend implementing AI in the retail environment that doesn’t take on a heavy customer service role. Chatbots may be an effective solution for basic frontline support, but shouldn’t be seen as a replacement for a well-trained, highly-engaged sales staff.

Choose technologies that enhance the customer experience

The foundation of any innovation or advancement should be looked at from a business standpoint. Given the customer is the driving force behind any business, it stands to reason that retailers should select technologies that will ultimately cater to the customer experience.

Technology can (and should) help to eliminate the friction that creates bottlenecks or frustrating experiences in the store. One area that’s becoming increasingly explored is the idea of doing away with traditional processes, including queue lines. Smart checkout processes use WiFi and voice technologies to create a connected shopping experience that reduces wait time and offers touchless ways to pay for purchases. In fact, one estimate suggests that reducing wait time may result in an annual turnover of $1.4 billion by 2023. 

The bottom line is this: AI is only useful if it solves real business challenges and provides a better solution than what has been or was being done before. 


Making the most of your retail space starts with understanding what inspires your customers to keep coming back for more, time and again. We help our clients conceptualize and build spaces that create experiences shoppers can feel, intangible elements that draw them in, and allows them to be a part of something greater than themselves. And we plan and build out programs that are consistently replicable while making the most of a client’s budget and timelines. Interested in exploring how we can help you with your retail design? Contact us today!