AI in Retail: Small Business Guide
This article is part of a larger series onRetail Management.
Artificial intelligence (AI) is the term for technology that employs machine learning and automation to make decisions and solve problems like a human would. Though it might sound futuristic, it is more common than you might think—in fact, the use of AI in retail already exists (online chatbots, for example), even if retailers don’t realize it. Other retail applications of AI include predictive merchandising, route optimization for deliveries, automated staff scheduling, and in-store demand forecasting.
Did You Know?:Some 80% of retail executivesanticipate that AI automation will be usedby their companies by 2027—and the AI in retail market is expected to hit$85 billion by 2033.
Ways to Use AI in Retail
You may be asking if you should use AI in your retail business. Generally, the answer isyes, you should use AI. Retail businesses of all sizes can leverage the power of AI and machine learning in day-to-day operations—and, as mentioned above, many already do. If you use automated reordering or evenFacebook dynamic ads, for example, you already use AI in your business.
We’ll cover some of thesoftware and tools you can use to integrate AIinto your operations later in this article—although, for independent store owners, this starts withusing a POS systemto track your sales, customers, and products.
Let’s explore some of the many different ways artificial intelligence can help your business.
Supply Chain Management
根据IBM执行报告,多达85% of retail companies plan touse AI for supply chain planning. McKinsey & Company found that companies that use AI in supply chain management haveimproved logistics costs by 15%, inventory levels by 35%, and service levels by 65%.
Because supply chain management touches so many areas of the business, there are many ways you can use AI. You might rely on ordering and routing automations, or use AI in analytics reporting to see which suppliers are high performers and which ones could use improvement.
Store Layout & Merchandising Optimization
Planning your store layoutand then optimizing it for the best customer experience and most sales is an important task for everyonestarting a retail business. AI can help in that aspect.
而不是仅仅依靠直觉或你的噢n strategies, you can take a data-informed approach to your retail store design and setup. Foot traffic counters and analytics platforms monitor not only how many people enter your shop but also where and how they move around within it. Placer.ai, which we include in ourguide to determining foot traffic, is one example of such a tool, but there are many out there that also use predictive analytics to help you plan your layout and identify upselling opportunities.
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Personalized Product Recommendations
Some 90% of retailers believeAI should be a prioritybecause it can help “update, manage, and enrich customer databases.” This is true—AI can take the data inputs about what your customers buy, how much they spend, and related information, and then predict future behavior.
AI will identify patterns and automatically adapt to those patterns to provide personalized and data-driven product recommendations forcross-sellingand upselling—two techniques to help increase your average transaction amount.
This is also helpful in a retail environment because you can equip your associates with mobile tools to help them aid customers in their shopping journey. Plus, your staff can make smart product recommendations at checkout in an attempt to upsell at the last minute.
To learn more about how automation can enhance customer profiles and customer relationship management (CRM), visit our guide toCRM automation.
Staffing & Scheduling
Setting an effectivestaff scheduleis important. You want to ensure you always have enough personnel to maintain the store and help customers, but you don’t want to overstaff to the point where employees have nothing to do or, worse, you’re losing money.
Predictive analytics and AI can help optimize employee scheduling and take some of the tedious manual processes out of it. When you look for powerfulretail scheduling software, identify options that leverage AI technology.
Humanity, for example, has two AI features: Auto-Fill Schedule and Location-Based Break Rules. The former allows retailers to quickly assign shifts and fill empty slots using custom-built rules to avoid scheduling conflicts. The latter automatically adds breaks to shifts while maintaining compliance with state-mandated labor regulations. Find out more about the platform and its offerings in our in-depthHumanity review.
Inventory Management
Inventory management is another area of retail business in which AI has come into play. There are many use cases for AI when it comes to inventory management, ranging from integrations with other platforms to robots that stock shelves—and everything in between. Some of thebestinventory management softwarealso have AI features for automated reordering, low stock alerts, and pricing discrepancies.
Forecasting & Purchasing
On the note of inventory management, AI is also helpful for improving the accuracy of a retailer’s forecasting and purchasing. Annualspend on AI softwarefor demand forecasting is expected to increase significantly, from $760 million in 2019 to $3 billion by 2023.
More accuratedemand forecastingleads to improved purchasing, so you can maintain optimal inventory levels.
Self-checkout & Loss Prevention
Retailers are constantly improving the checkout experience both for the customer and for loss prevention. AI in self-checkout monitors shopper activity and alerts staff to cases of suspected theft. The value of transactionsprocessed by smart checkout technologieswill increase from just $2 billion in 2020 to $387 billion in 2025, Juniper Research estimates.
雷竞技app
AI is also prevalent inretail marketing, especially as it relates to automation. In fact, AI technologies formarketing campaign personalizationgrew 114.5% in one year—the fastest-growing use case. Marketing automation includes email sequences, social media advertising optimization, customer segmentation, and even personalized promotions and campaigns, among many other things.
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You can also use AI tools likeChatGPTto help you write copy. This is especially helpful if you don’t consider yourself a writer or marketer. You can prompt the AI writing tool to write social media captions, headlines, email subject lines, product descriptions, and more. Some editing is almost always required, but it’s a great way to get started with a blank page.
Small business platforms like Shopify, Wix, and Squarespace already have native tools for AI-generated copy, blog posts, product descriptions, and even site design.
Virtual Fitting Rooms
Virtual fitting roomsare creating a footprint in the retail landscape as more and more businesses adopt the technology. Many of these platforms include some sort of AI technology. This technology tracks user behavior, notes which products customers like, and makes predictions and recommendations based on those data inputs.
Real-life Examples of AI in Retail Stores
你不需要成为一个巨大的零售连锁店小鬼lement AI for your business. Check out the following examples of artificial intelligence in retail to get inspiration for your own business.
Benefits of AI for Retail
AI has many potential benefits for retail businesses, including but not limited to:
Sustainability
AI technology can help businesses operate more sustainably in a number of ways, including:
- Monitoring, controlling, and optimizing energy consumption levels
- Accurately forecast demand for products to eliminate expired inventory and waste
- Reduce emissions through automated supply chain optimization
Cost Efficiency
Optimized inventory levels reducecarrying costs. AI reduces the need for costly human labor and allows people to focus on more impactful tasks. On top of that, automation improves accuracy while mitigating costly errors.
It also provides a rich amount of data that businesses can use to make better, more informed decisions—with less financial risk. These are just a few of the ways AI helps retail businesses become more cost-efficient in their operations.
Customer Satisfaction
AI also automates and impacts a lot of customer-facing interactions. Marketing campaigns, automated email sequences, personalized ads, customer service—these all stand to benefit from AI, and when the customer wins, so does your business.
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AI can also provide solutions quicker, especially during times a human isn’t available. It can personalize communications and offers automatically, so your customers feel like you’ve taken time to get to know them and share relevant promotions. You can speed up the checkout process, reducing friction and frustration.
AI in Retail Software & Tools
It’s easier and more affordable to get started with AI than you might think. If you want to use AI in your retail business, simply adopt some tools and technologies that incorporate AI into their platforms.
Customer service softwareZendeskand accounting toolBotkeeperare two examples of great retail platforms that take advantage of the benefits of AI. Learn more about them in ourZendesk reviewandBotkeeper review.
Here are some more places to start your research:
- Best Sales Automation Software
- How Artificial Intelligence Improves Customer Service
- Best AI Content Writers for Small Businesses
- 12 Ways to Use AI in Small Business Marketing
Bottom Line
Artificial intelligence in retail has been around a lot longer than you might realize. In fact, many small retail business owners may be using AI already without even realizing it. Implementing AI into your retail business isn’t as complicated as it sounds. With so many business tools utilizing the technology, it’s accessible to merchants of all sizes and stages of business