With the Artificial Intelligence (AI) market predicted to grow at a CAGR of 53.65% from 2015 to 2020, momentum for AI is undoubtedly surging. AI, which is essentially the capability of a machine to imitate intelligent human behaviour (such as visual perception, speech recognition, etc.) and carry out multiple tasks, is proven to drive greater efficiency, and is on course to play a key role in propelling the growth of the retail sector. As consumers continue to demand greater speed and easier access to product and service information, fuelled by our connected world and the internet of things, AI will dramatically enhance the customer experience through improving responsiveness, personalisation and productivity. The potential of AI and its anticipated impact on the future of retail is massive, and by embracing it early on, brands and retailers have the opportunity to gain a major competitive edge.

Why bother?

In a world where a growing number of customers now check their smartphones while in store and browse consumer-generated content (CGC), such as product ratings, reviews and Q&As, photos and videos, retailers and brands need to evolve and react to demands that blur the lines between online and offline shopper journeys.

AI can be a facilitator towards this shift in retail, and can take many forms – be it chatbots, voice activation services or robotic deliveries – and many industry players are already experimenting with it. Starbucks, for example, built a Siri-like virtual assistant into its app, Starbucks Barista, while Amazon introduced its Amazon Go store, where people download an AI-bolstered mobile app which tracks items purchased and charges the customer automatically once they leave. And this is just the beginning; the use of AI could lead to real-time, highly relevant product recommendations and promotional offers, while providing a tailored customer experience. In fact, research shows that 62% of millennials in the UK would appreciate a brand or retailer using AI technology to show more interesting products. This way, AI can help to expedite customer progression through the purchase funnel.

AI can also help navigate online and physical stores and websites that draw on customer behaviour to make them more appealing. In the grocery sector for instance, 82% of consumers use their smartphones to research items in the aisle each time they go to the store, while 38% of new purchases begin with online research. This has reshaped how consumers shop Not only is this pre-purchase research influencing in-store purchases, but it is and the information they expect grocery retailers to provide about their stores, products, and delivery services. Once this information is provided and managed properly, AI can be used to analyse it and offer a customised shopping experience.

In addition, AI can be advantageous for R&D purposes – it can be used to implement customer feedback in order to improve products and services, cut product testing time short, help with inventory management and so on. There are also many direct business benefits when customers interact with this feedback, or CGC –last year, retailers saw a 106% increase in conversion rates, and a 116% increase in RVP (revenue per visitor) while brands saw an increase of 90%, and 101% respectively. Equally, online interactions can affect in-store sales, and vice versa. For Unilever, customer interaction with ratings and reviews led to Store Locator conversions and a 150% increase in intent to purchase on SimpleSkincare.com. With AI, the rate of these interactions and therefore the consequent profit, will be on a much larger scale.

Striking the data balance

As e-commerce is by definition a data-rich industry, big data analysis is increasingly being used to power behavioural insights in retail across different channels and in various formats. Smart marketers are using AI, such as photo recognition, search and chatbots, to streamline laborious retail processes, while keeping humans involved for quality assurance to provide optimal results.

However, in today’s connected world, marketers are still gathering any data they can get without necessarily having a strategy in place to leverage it. For instance, retailers don’t need to hold 10,000 data points about a consumer; they need the 10 that matter in their purchase journey. Via data analytics, they can then gain actionable insights and help shape a more effective, personalised and seamless shopping experience.

Ultimately, as insights from Bazaarvoice’s network of shoppers revealed, what customers care about is how data is actually being leveraged to deliver relevant, targeted experiences at a greater speed – such as coupons, based on consumers’ past purchases or exclusive access to certain products due to brand loyalty. These little factors can make a significant difference. According to Bazaarvoice’s recent study, more than 70% of consumers said their purchase decisions were influenced by coupons and discounts, while 54% claim to have made a purchase as a result of brand outreach regarding abandoned shopper cart items or recommendations based on past purchases.

AI ready?

Brands and retailers know they need to put innovation at the core of their growth strategy. They can leverage customers’ data gathered to better understand the customer journey, enabling them to adapt the in-store and online layout and customer service accordingly to maximise the time spent on each platform. There is also potential in e-commerce to monitor and adapt to the customer’s real-time behaviour and personalise the experience, which is further proof that on-and-offline channels should work in conjunction.

It’s crucial to remember that the purpose of these innovations shouldn’t be to ‘woo’ customers, but rather to accommodate and complement their shopping experience. Chatbots and similar technologies will lose steam if not used correctly by businesses, and if they sacrifice relevancy and personalisation for efficiency. The technology is there to enable human operations, and it’s still crucial to engage consumers and sustain existing relationships.

The bottom line is that AI in retail can be used to enhance every step of the consumer journey, from product discovery, to pre-ordering an item and checking stock availability while in-store. New technologies will gradually lead to the omnipresent shopper of the future, who can shop anywhere, anytime. This shift in behaviours will yield benefits for consumers and businesses alike, and the latter need to ensure they are properly prepared for what’s to come, keeping consumers’ best interest at heart.

Prelini Udayan-Chiechi

Prelini Udayan-Chiechi


Prelini Udayan-Chiechi, VP Marketing EMEA at Bazaarvoice.