How AI is changing the retail industry shopping experience

The retail industry is evolving quickly, driven by the integration of new technology like Artificial Intelligence (AI). AI is making shopping more personal and inventory management smarter, reshaping the future of retail, and creating efficient, customer-led experiences.

Here are some exciting ways AI is revolutionizing the retail landscape and retail operations.

The role of artificial intelligence (AI) technology in retail

AI technology is helping retailers stay competitive in a fast-changing market, offering faster and more tailored solutions for both businesses and shoppers. Let’s explore the core technologies driving these changes.

Predictive analytics

Predictive analytics helps retailers anticipate trends, optimize stock, and better understand customer preferences. By analyzing large datasets, this technology enables:

• Improved demand forecasting to reduce out-of-stock or overstock situations
• Better pricing strategies based on historical and real-time data
• Enhanced promotions by predicting custom responses to campaigns

Machine learning

Machine learning algorithms are crucial for segmenting customers and personalizing their shopping journeys based on insights from past behaviors and preferences. Machine learning helps with:

• Customer segmentation, leading to more relevant offers and messaging
• Personalized product recommendations online and in retail stores
• Dynamic pricing adjustments in real-time

Computer vision

Computer vision enables various in-store and logistic applications, using cameras and sensors to recognize products, monitor inventory levels, and improve store layout planning. Retailers use computer vision for:

• Inventory tracking in real-time, reducing the need for manual checks
• Shelf-scanning to ensure products are displayed correctly
• Checkout-free shopping experiences, where customers can grab items and leave without scanning or waiting in line

Natural language processing (NLP)

NLP-powered chatbots, virtual assistants, and voice search make it easier for customers to get information and assistance in real-time. It’s widely used for:

• Chatbots that provide instant customer support, from answering questions to assisting with purchases
• Voice search optimization, enabling hands-free browsing and ordering
• Analyzing customer feedback from reviews, social media, and surveys for actionable insights

Edge computing

Edge computing enables faster data processing by analyzing data locally rather than sending it to the cloud. This is useful in retail settings where quick, local insights are needed. It allows for:

• Faster in-store data processing for applications like computer vision and IoT devices
• Improved latency for in-store experiences such as interactive displays
• Better data security and compliance by keeping sensitive information local

The 5 ways AI is changing the retail industry

AI is making big changes in retail, from improving customer service to managing inventory and enhancing security. With tools like voice assistants, personalized shopping, and augmented reality, retailers can create more convenient and engaging experiences for customers. Here are five key ways AI transforms the retail industry.

Provides better customer service with AI voice assistants

AI-driven voice assistants are revolutionizing customer service by handling various customer queries, product inquiries, and order tracking, as well as offering instant and efficient customer service 24/7 to support high customer demand.

A new generation of voice assistants is revolutionizing how retail businesses handle customer inquiries, making the experience seamless and efficient. These cutting-edge tools leverage advanced technologies, including:

• Automatic Speech Recognition (ASR): Converts spoken words into text for accurate processing.
• Natural Language Understanding (NLU): Deciphers the intent behind customer queries.
• Large Language Models (LLMs): Powers intelligent, conversational responses.
• Speech Synthesis: Creates lifelike voice interactions for a natural feel.

With this robust technology stack, these solutions allow customers to interact naturally, just as they would with a live agent, helping them resolve issues efficiently and at scale.

Voice assistants can authenticate customers against their number, name, address, and postcode to pull real-time information about customer orders. This includes locating their order number or rescheduling and negotiating delivery slots without speaking with a customer service representative.

Listen to an AI voice assistant handle a customer’s order tracking request.

Creates personalized shopping experiences at scale

Retailers can harness machine learning to analyze vast customer data, gaining insights into individual tastes, shopping history, and behavioral patterns. With this knowledge, they provide highly personalized product recommendations and targeted marketing campaigns, elevating the shopping experience and improving customer engagement.

Customers can also receive product suggestions based on their past purchases, browsing history, and interactions with brands on social media. This level of personalization delights customers, boosts conversion rates, and builds brand loyalty.

Facilitates smarter inventory management

Retailers are part of a new era of inventory management, with the ability to predict demand patterns and adjust stock levels in real-time. This control enables retailers to optimize inventory to prevent stockouts and reduce excess inventory, reducing the need to carry costs while ensuring products are readily available when customers need them.

AI continues beyond data analysis; it uses multiple variables, such as seasonal trends, weather patterns, and even external events, to provide accurate demand forecasts. By staying ahead of changing customer preferences and market dynamics, retailers can avoid costly inventory errors and maximize profitability.

Offers life-like virtual shopping experience with augmented Reality (AR) and visual search

AI enhances the online shopping experience through augmented reality and visual search technologies. Customers can now virtually try on clothing, visualize furniture in their homes, or preview products in real-world settings.

This interactive and immersive experience empowers customers to make more informed decisions while reducing the rate of returns. Shoppers gain a clearer understanding of how products will fit into their lives, leading to increased satisfaction and reduced hassle for both buyers and retailers.

Protects with stronger security and fraud detection

AI plays a pivotal role in enhancing security and fraud detection. AI algorithms analyze real-time customer behavior and transaction data to detect and prevent fraudulent activities.

By following Knowledge-Based Authentication (KBA) processes, AI-powered voice assistants guide callers through a series of security questions like a customer service representative would. This approach eliminates the risk of emotional manipulation present in many social engineering attacks.

By safeguarding against security threats, retailers protect themselves and build trust and confidence in their brand among consumers (as well as dispel conversational AI myths).

Real-world use cases of AI in retail

AI is helping retailers deliver personalized experiences, optimize operations, and better serve their customers. Here are three standout examples of how leading companies are leveraging AI to drive innovation:

Amazon deeply understands its customers

Amazon is a good example of how AI can transform retail by helping companies deeply understand and respond to customer needs. By leveraging vast amounts of customer data – like purchase history, browsing behavior, and individual preferences – Amazon delivers highly personalized product recommendations, which makes shopping more relevant and engaging for each user.

Amazon also uses an AI-powered pricing tool that dynamically adjusts prices, taking into account factors like demand, competitor pricing, sales trends, and product availability. This strategy helps to maximize sales opportunities and product visibility.

ASOS gets your style through visual search

ASOS makes shopping easier and more personalized with its Style Match feature, which uses AI-powered visual search. Customers can upload or take a photo of an outfit or item they like, and the AI analyzes details like color, pattern, and style to find similar products in ASOS’s catalog. This feature helps customers quickly find items that match their style, providing tailored recommendations that make online shopping faster and more enjoyable.

Lowe’s simplifies inventory management with AI

Lowe’s has embraced AI-driven innovation to improve inventory management and customer experience. Through Lowe’s Innovation Labs, the company has piloted several advanced projects, including the LoweBot—an in-store autonomous robot designed to answer customer questions, track inventory, and analyze sales patterns. During its initial rollout, LoweBot assisted shoppers directly while gathering data to enhance store operations.

Building on these advancements, Lowe’s has expanded its use of AI with tools like computer vision to monitor shelves and quickly identify when items need restocking. Additionally, Lowe’s has introduced a text-based customer service platform that anticipates and responds to customer needs, making it easier for customers to get quick, personalized assistance.

Meet the demands of retail effortlessly with PolyAI

Embracing AI is the key to unlocking new levels of personalization, operational efficiency, and exceptional customer experiences. Retailers leveraging voice AI are building a more agile and customer-led future to stay competitive in the retail landscape.

Customer-led voice assistants are transforming the retail customer experience

Deploying a PolyAI voice assistant gives time and resources back to your contact center, enabling agents to focus on more complex customer queries and leave a positive lasting impression of the brand experience.

Tracking returns, refunds, and repairs

In the same way, callers want to track delivery status, they may want to chase a return to understand if it’s been received yet, when the refund will be paid, or, in the case of a repair, if it’s been fixed.

PolyAI voice assistants allow customers to hold conversations over many turns for as long as it takes to solve the problem so that customers can speak however they like to get the information they need.

Seamless caller identification

Caller identification isn’t always a linear process. When asked for an order number, a customer might say, “I don’t know.” What happens then?

PolyAI can ID callers based on the order number, address, name, zip code, or any other piece of information you hold to connect the caller to the order. When the customer has questions or doesn’t know a piece of information, our voice assistants can guide them through the process as a live agent would.

Deploying a PolyAI voice assistant enables retailers to offer more efficient, accessible, and natural ways to interact with their favorite brands over the phone.

Discover how PolyAI can help you to deliver effortless CX at scale.