How To Improve Retail Customer Experience With AI

By harnessing the power of AI, retailers can give customer experience a facelift and revenue a boost

Adebisi Adewusi
March 12 2018

Consumers no longer only compare you with a similar brand. You’re up against the best experience they’ve had with any brand, in any sector. That’s probably Uber, Airbnb or Nike. Since 70% of buying decisions are based on customer experience, delivering deeper, richer customer experiences is basically a do or die affair. This makes sense in a world where consumers have access to nearly unlimited information and alternative options. While there are many ways to deliver improved experiences to consumers, brands are turning to artificial intelligence. According to a report from Forrester, 57% of enterprises believe improved customer experience and support will be the biggest strategic growth/benefit they gain from AI. And 94% of retail executives familiar with AI intend to invest in it. Here’s how AI can improve your customers’ experience.

Never Run Out Of Stock: Predictive Replenishment

An IBM study revealed that if an out-of-stock item could not be found at another location of the same retailer, 72% of customers will shop at a competitor. Alternatively, carrying excess stock could erode profit margins for retailers. According to a study by IHL Group, leftover stock and out-of stocks cost retailers a whopping $1.1 trillion globally every year, and sales forecasts are reportedly as low as 46% in accuracy. Not only can AI automatically and accurately forecast daily orders per store and per SKU to meet customer demand, its self-adjusting capabilities can optimize demand down to product level – factoring in external influences such as store demand patterns, weather, and promotions.

The benefits of AI in inventory management isn’t mere hype. UK supermarket giant, Morrisons, used AI to stock 491 stores, effectively reducing shelf gaps by 30%. In 2016’s final quarter, they recorded a 1.7% like-for-like sales growth. Similarly, German online and catalog retailer Otto Group uses AI to  analyse around 3 billion past transactions and 200 variables to  predict what customers will buy in the near future. This enables Otto Group to automatically process orders with partner suppliers totaling around 200,000 items a month—all without human intervention. With AI, you can be responsive to your customer’s requirements, improve accuracy in forecasting and optimise your stock holdings for the maximum profit without breaking a sweat.

Have An In Store AI Shop Assistant

While some believe brick and mortar is dead, recent happenings indicate otherwise. Amazon recently opened Amazon Go and Chinese retail giant Alibaba announced plans to open supermarkets. Brick-and-mortar is still important to consumers, but the catch is to deliver an exceptional in-store shopping experience. One way to do that is through AI powered shopping assistants. Macy’s has already introduced the technology inside their stores; through their in-store shopping assistant, ‘Macy’s On Call,’ customers can ask about products, services and facilities, and the exchange is meant to mimic human interaction. The bot uses natural language processing to send personalised responses to customers’ mobile phones and becomes smarter with every single input. Home improvement chain Lowe’s has taken AI assistants one step further with in-store robots called LoweBots.  The robot greets customers at the door, answers simple questions from customers and also helps them locate items in the store. It even assists employees with inventory management.

AI shopping assistants enhance in-store customer experience using advanced artificial intelligence and machine learning algorithms, helping consumers make smart shopping decisions, whether its  shopping for shoes by price, or locating the best place and time to buy a dress.

Visual Search: See Now Buy Now

According to a 2016 Demac Media report, over 30% of online shoppers use the search feature on e-commerce sites. The report also suggests that shoppers who used site search showed a 216% increase in conversion rate and a 21% increase in average order value. Unfortunately, because consumers don’t always search for the right word or have spelling mistakes, retailers are unable to convert online shoppers with high intent to purchase. And consumers can’t find what they need. Visual search firm Slyce reported that 74% of consumers say traditional text-based keyword searches are ineffective at locating the right product, and e-commerce product discovery platform Unbxd, found that 25% of all e-commerce site search queries are misspelled and could lead to more than $3 million in revenue loss. This is where AI comes in.With AI based visual search, consumers don’t have to struggle to describe the thing they want to buy and brands turn profits. By applying image-recognition and natural-language processing to search functions, AI helps retailers identify relevant search terms based on a photo and provide relevant searches.

Take a look at Ebay’s image search feature:

With Ebay’s Image Search feature, consumers can upload images onto the brand’s app and get quick results based on visual similarities.  This feature sifts through more than 1.1 billion listings on eBay, providing a new way for consumers to discover items and creating a seamless shopping experience. Similarly, in 2017, American lifestyle brand Tommy Hilfiger enabled users to purchase runway looks using their customized visual search app-Tommyland. Ted Mann, CEO of Slyce—the creators behind Tommyland—confirmed that Tommy Hilfiger’s visual search app helped boost sales (he declined to give percentages) and expand their customer experience.

Programmatic Advertising: The Right Ad, At The Right Time And Place

Few things annoy customers more than irrelevant and intrusive online adverts. There were over 600 million devices running adblock software globally, 62% of which were on mobile devices. On the other hand, relevant ads are welcomed by consumers. One survey found that 78% of consumers were more likely to make a purchase when presented with personally relevant advertising, and 88% of consumers say that personally relevant content improves how they feel about a brand.

Lying at the intersection of data and personalisation, programmatic advertising uses consumer insight from terabytes of data to customize messages and instantly deliver the most appropriate ad campaigns to . e-Marketer states that programmatic advertising will account for 84% of all digital display ad spending by 2019.

Businesses that use programmatic advertising have become more efficient at media buying and seem an increase in revenue. Lingerie brand Cosabella achieved a 336% return on ad spend (ROAS), and a 155% increase in revenue directly attributed to Albert, an AI marketing platform. Every touchpoint consumers have with your brand is a chance to deliver an exceptional customer experience, and that includes when and where your ads pop up.

The Bottom Line

It’s harder than it used to be to deliver experiences that meet or exceed customer expectations. But with AI, you can provide a truly differentiated experience that your customers will remember. AI  is part of our world, and it isn’t going anywhere. It only makes sense you use it to your advantage.


Adebisi Adewusi

Adebisi Adewusi is a freelance B2B writer and a Huffington Post Contributor. When she’s not creating compelling content for businesses, you’ll find her capturing moments with her Nikon d600.

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