Having been tagged as the vertical that led to a massive consumer departure from brick-and-mortar stores to online shopping, AI in retail market has certainly come a long way in the last few years. While many retail industry leaders have come to visualize artificial intelligence in retail as in-store robots that automate processes like checkout, shelf stocking and inventory listing beside conversing and helping customers, the first wave of artificial intelligence in retail market had actually been much subtler but equally effective. Artificial intelligence has today come to permeate every aspect of e-commerce, however instead of directly replacing human workers, it has made its first mark with data collection, customer interaction and decision making.
It is prudent to mention though, that the advent of online shopping does not mean the total extinction of brick-and-mortar stores. The proliferation of the technology has only led to an upsurge in artificial intelligence marketing solutions and the deployment of AI in retail store via massive upgradation programs. When Amazon set up its Amazon Go grocery store for example, customers only had to pick their products and leave while sensors, cameras and artificial intelligence performed the checking out. The launch set off a silent alarm in the retail sector about how the expansion of such a futuristic store can put conventional grocery retailers out of business, thereby prompting traditional retailers to penetrate artificial intelligence in retail market.
Recently even Microsoft has conducted a round of discussion with retail giant Walmart to bring the same technology to the retailer for fully automated stores. Though the technology is in its infancy, it seems to be one of the strongest trends that will shape the future of artificial intelligence in retail business.
Enlisted below are a few developments that are prevalent in this vertical, driven by the extensive deployment of AI in retail stores, methodically presented in the form of statistics.
The $8 billion marker: As per estimates, artificial intelligence in retail market size stood at a modest $650 million in 2017. However, retailers are now heavily investing in artificial intelligence tools to be able to differentiate themselves from their competitors and offer better services to their customers. Driven by the advent of such tools ranging from automated stores to chatbots that provide instant customer service, artificial intelligence in retail industry share is expected to surpass a humongous $8 billion by 2024.
1/3 shoppers: Considering the changing consumer preferences toward technology and the efficiency of artificial intelligence marketing solutions, experts assert that the time is now ripe for companies to invest in artificial intelligence in retail market. According to a recent research it was found that the tactical deployment of artificial intelligence has encouraged 34% – around one third of shoppers to spend more money online. Nearly 49% of shoppers admitted that they are willing to shop more with the presence of AI.
11.5 percent: Product recommendation is an area that is strengthening returns for retail companies using AI. With behavioral traits, records of past shopping and search results, AI can present a list of recommended products to shoppers. Studies reveal that e-commerce platforms generate 11.5% of their revenues through purchases made on the basis of recommended products. Predictive analysis has been able to decipher customer behavior and responses and has helped in augmenting online retail with effective recommendation positioning, feature enhancement and pricing.
35 percent: As demonstrated through the efforts of Amazon and Microsoft, automated stores can be sizably credited for the expansion of artificial intelligence in retail business. Indeed, automated merchandising in 2017, accounted for 35% of artificial intelligence in retail market share. Automated merchandising solutions assist companies by tracking customers throughout the shopping duration and collecting data which is later compiled to offer a more personalized shopping experience to customers.
40 percent: Chatbots are acting as one of the chief facilitators of providing customers with instant service and popularizing online retail further by increasing customer satisfaction. Chatbots thrive on the Natural Language Processing – a highly advanced technology deployed by retail companies to analyze consumers. As per estimates, NLP accounts for more than 40% of artificial intelligence in retail industry share.
2.3 million: It is quite imperative that automation will probably cost some jobs for a section of the retail workforce. In fact, this has been one of the greatest hindrances to the growth of artificial intelligence in retail business. Estimates show that 1.8 million jobs will be eliminated by 2020 due to the prevalence of artificial intelligence. However, if the Amazon Go store is again considered as an example, it is worth mentioning that though the store had an automated checkout, there were plenty of helpers around the store who were assisting customers. It is therefore being inferred that the emergence of artificial intelligence will not obliterate jobs in the retail sector, rather, it will help to evolve the role of humans in the retail market. Estimates depict that instead of killing jobs, artificial intelligence will create more than 2.3 million jobs across various spheres.
How technological breakthroughs have changed the outlook of artificial intelligence in retail business
The future of retail companies using AI will be further augmented by trending technologies like virtual mirrors, gesture recognition, AI enabled chatbots, cognitive computing and video analytics. The fashion and apparel industry has been able to create personalized wardrobes for shoppers using shopping history and add to customer experience with virtual mirrors. Not only online but physical brand stores such as Rebecca Minkoff and Van Heusen already have such virtual mirrors in their stores.
Artificial intelligence marketing solutions such as chatbots are among the fastest growing component solutions in artificial intelligence in retail market due to their expansive knowledge base, 24X7 access and speedy, real time interactions. For instance, many e-commerce operators use a chatbot called Chatfuel available through Facebook Messenger which provides features like media player, reservation checking and notifications. While this is a B2C use-case of chatbots, it is essential to note that they also help in bringing analytics to the employees’ messenger app.
Realizing the benefits of artificial intelligence in retail business, most offline retailers are using AI to create customer support, personalized product catalogs and exclusive product information. Studies showed that 86% of consumers found personalization to play a significant role in purchasing decision. Famous retailers like eBay and H&M have also used chatbots and have witnessed a huge increase in customer engagement.
Artificial intelligence in retail business: Future insights
With the advent of artificial intelligence in retail market, the walls between the seller and the buyer are expected to disappear. While predictive analysis will better anticipate customer choices, present them readily with products that are meant to attract them and push sales further, chatbots will continue to add efficiency to customer experience, inventory management and supply chain dynamics.
A wide range of choice, better customer satisfaction and pricing advantage are the three factors that reign supreme in the retail industry. Even a negative economy has not been able to dominate over these factors – around 60% of customers admitted to shopping for a better experience even amidst an economic meltdown. Customers have come to admit that they value a satisfactory experience above products and price differentiation. As on today, product suggestion, cognitive customer service, AI powered search and many other such innovations have personalized online shopping and wreaked havoc for the giants of the retail sector. Many among them are now either announcing store closures or frantically transforming their supply chain to be more web centric, by robustly deploying AI in retail stores. It is thus rather overt that artificial intelligence in retail market has thrived on ensuring better customer experience and will soon push traditional retail far behind in the competition.
Global Market Insights, Inc. has a report titled, “Artificial Intelligence (AI) in Retail Market Size By Component (Solution [Chatbot, Customer Behavior Tracking, Customer Relationship Management (CRM), Inventory Management, Price Optimization, Recommendation Engine, Supply Chain Management, Visual Search], Service [Professional Service, Managed Service]), By Technology (Machine Learning, Natural Language Processing (NLP), Computer Vision), By Application (Automated Merchandising, Programmatic Advertising, Market Forecasting, In-Store AI & Location Optimization, Data Science), Industry Analysis Report, Regional Outlook (U.S., Canada, UK, Germany, France, Spain, Sweden, Switzerland, Australia, China, India, Japan, South Korea, Singapore, Brazil, Mexico, UAE, Israel, South Africa), Growth Potential, Competitive Market Share & Forecast, 2018 – 2024” available at https://www.gminsights.com/industry-analysis/artificial-intelligence-ai-retail-market