Retail has continued to push back against e-commerce, thanks to new technology that has drawn shoppers back in. AI technology will enable marketing departments to analyze store returns, receipts, and loyalty cards to predict future demand for apparel and accessories, as well as manage inventory. AI, combined with in-store Wi-Fi, can help optimize planogram location and displays by correlating traffic patterns to purchases.
Intelligent, actionable data has long been a silver bullet for e-commerce companies, and now brick and mortar retail has access to the same technology. When consumers want to buy something, if they know what they want and at what price they are willing to spend, then they go to the internet to look for it. When they want a personal service or aren’t sure want they need, they’ll go into retail stores and are willing to pay higher prices. In an era where e-commerce has devalued personal service, companies who can combine the best of in-store technology with amazing customer service are going to be well prepared to thrive in the future.
By using AI and machine learning technology, brick and mortar retail environments can learn more about their customers – their behaviors, preferences, and how they engage with the brand. When provided with sales reports, machine learning can discover patterns in customer’s buying behavior and learn what they buy together (and when). Based on this information, AI can suggest which items should be placed next to each other in-store, to aligning with customer buying trends and increasing the purchase of additional items (improving units per transactions). These recommendations are not simply assumptions: they are founded in real data based on the actions of a retailer’s customer base, increasing the likelihood they will perform.
AI will also enable retailers to study likely outcomes of different pricing strategies so they can come up with the best promotional offers, acquire more customers, and drive sales growth. Instead of wondering “why did sales spike last week?,” AI and machine learning can correlate micro-trends (promotions, economic data, weather, time of year, etc.) with sales of certain products, creating an effective dynamic pricing strategy and better understanding the factors influencing buying behavior.
Finally, AI supports and enhances inventory management for retail. Controlling inventory costs can make or break the profitability of a retail business. For example, by using AI to predict customer patterns, a business can analyze past sales data to inform how many units of a new product to order.
Next-generation retail stores are continuing to leverage new technology to operate more efficiently and make better decisions. Strategically employing AI and machine learning (and automation in general) will be a key component for success for retail businesses in 2020 and beyond.