How AI is Reshaping Retail


As consumer preferences keep changing and the online buying sector continues to evolve, retail brands need to prioritize innovation to stay competitive in today’s global market. Utilizing Artificial Intelligence (AI) is a great way to stay ahead of the curve. 

AI can provide a plethora of opportunities for retailers, including supporting their operations, increasing profits and optimizing business processes. According to Fortune Business Insights, AI services in the retail sector are predicted to increase from $5 billion to above $31 billion by 2028.

“AI will play a very large role in retail in the long term,” explains Joyce Mueller, Director of Retail Solutions at SADA. “In 2024, there will be a lot of focus on experimentation. What I see retailers doing is looking to see how they can reduce the risk of these technologies, ultimately producing higher value and reasonable effort in creating them.”


Improving the Customer Experience

One of the main ways AI can help retailers is by improving the customer experience. Retail expert Kathy Kimple expects brands will continue to prioritize AI for customer service this year. 

“Retailers will use AI to improve customer experience and customer service,” she says. “According to recent research from Salesforce, 32% of retailers said generating personalized responses for agents to send to customers is their number one use case for AI.”

One particular customer service area that some brands are honing in on is the search bar on their websites. Mueller explains that traditionally, search boxes have been keyword-based. Shoppers interact with the bar to find specific products they’re looking for, such as red dresses. 

More recently, retailers are adapting back-end solutions with AI to understand shoppers and where they’re at in their shopping journey, and putting that into their search bars. Here, AI is helping to better personalize the search to be more contextual and offer additional results. 

“This may look like recommendations for similar products or items that other customers have purchased, as well,” says Mueller. “This year, we’re adding Gen AI (Generative AI) where we can make those search and recommendation experiences more conversational. As we get more sophisticated with chatbots, those conversations can be more informative and interactive.”

Another area in which retailers are experimenting with Gen AI is to help store associates, according to Mueller. Employees don’t always know what inventory is in the back, so they have to go and check if a customer is looking for an out-of-stock item on the sales floor. Meanwhile, Gen AI can have all of that information stored and on hand.

“All of this helps to create a much better customer experience,” says Mueller.

Latest AI Technology Trends

There are so many ways in which AI can help to improve the retail industry, but Kimple says brands should focus on product recommendations and category navigation. These two areas are producing more effective results due to AI algorithms. 

“AI enables more targeted search results based on customer engagement and provides more effective customer communication through marketing channels and website personalization,” she says. 

Agreeing with Kimple is Mueller, stating that modernizing search and recommendation engines is something that retailers absolutely need to be implementing. 

“The old search and recommendation engines are very labor intensive,” Mueller explains. “But with AI, it learns and adapts over time, requiring much less work on the administrator’s part. Overall, AI will make your associates more productive and give your business a high return when applying it to other areas of your company.”

Consumer Prefer to Use AI

At the end of the day, shoppers will love anything that helps to improve their buying journey. With all of the new advances that AI can offer, including better product recommendations and improved chatbot conversations, finding what you’re looking for has never been easier. 

“We think consumers prefer to have AI, depending on the application,” says Kimple. “AI can increase convenience for customers; it can offer personalized experience, faster customer service, and products that consumers are more likely to purchase based on AI algorithms.”

Looking to use AI to enhance your retail brand? Kimple suggests you start by unifying and cleaning up your data to prepare your channels for Gen AI. Making sure everything is in place is the foundational element of fitting or using AI for a specific business outcome or use case.