AI in Retail: What can you do with it?

There was a time when shopping and going to the store were non-negotiable. You couldn’t have one without the other, yet today, we are talking about cashless -and NFT- payment and online shopping. E-commerce has come to stay, and with the incredible advancements in technology, most precisely artificial intelligence, the retail sector does not hesitate to potentiate the industry. 

Follow me as we discover how AI can transform the retail industry, the success stories of companies making the most of this technology, and the benefits of this ever-evolving industry. 

AI in Retail: A key partner you want to hold on to. 

According to Nasdaq data, the retail industry is expected to keep growing all through 2024. As stated by Anjee Solanki, National Director of Retail Services and Practice Groups for the U.S., “Retail drove 18% of all sales volume in the third quarter of 2023, the highest share since 2018. Investors are likely ‘underweight’ to retail exposure, and while it is unlikely that retail will see a 30% share as it did in the early 2000s, there is room for it to take on a larger share of the investment market in the near term.”

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It is no secret that retail is a brutal competitor’s industry. Getting the customer's attention is getting harder and harder, and luckily for those in tech, AI has been a major player over the last years to gain a competitive advantage. According to Analytics Insight, by 2025, 80% of retail executives expect their companies will use intelligent automation technologies, but how? And most importantly, why? Is the growth real? We’ll try to answer that question. 

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How is AI used in retail?

In most cases, using AI in their business means better managing the information you already have and making smart decisions. In this case, it is no different. Put AI to work, and you can have more personalization with processed data about your customers, price optimization by reading market prices automatically and in real time, and better delivery services by optimizing the routes and packages. This is only the beginning. 

When your approach to AI is data, you can take the customer experience to the next level. With LLMs (Large Language Models), the insights you get from data you already have are powerful. This gathers information from all the different sources, and with that, you can build different customer profiles—aka customer segmentation—and create personalized and custom marketing campaigns. 

The efficient use of information not only optimizes the marketing process but also increases ROI, provides a better customer experience for your users, and is totally based on your customer's behavior. With all the data, the LLM produces an output based on what you are looking for and the available information. This could mean a full analysis of your shopper behavior, sales performance, or inventory status. 

You could use Machine Learning to learn from historical data and have the model learn and re-learn as time passes; automation processes can also be applied with AI to optimize time and reduce human error; you could create experiences and improve safety with Computer Vision and so much more. 

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What it takes to be n°1: ULTA Beauty’s path to AI

We have been building a strong partnership with ULTA Beauty for years now, and we have seen AI grow incredibly throughout the company. 

By providing great quality results, we have created 2 beautiful projects: a try-on make-up experience for users online and a customer fidelity program enhancement project. These two projects have substantially increased ULTA’s visibility and marketing ROI. 

ULTA’s try-on makeup experience started with the pandemic. During COVID-19, trying on makeup products was impossible. Besides the physical distance, ULTA needed a new way to bring its products closer to its customers. So, we created a facial recognition system that could read customers' faces so they could try the products through an app on their phones. The app still works today with huge improvements and is used by millions of ULTA’s client’s. 

As for our increase of marketing ROI project, we helped ULTA potentiate and make the best of the information they already have. ULTA has more than 40 million members in their subscriber’s data base, each of them with valuable information about their preferences, likes and dislikes, purchase history, and more. What we did was help ULTA’s data science team to potentiate their marketing strategies and provide data on how their consumers were behaving and how could ULTA make their experience even better. 

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Benefits of using AI in Retail

So, if by now you are not sold ;) that AI can make a substantial difference in retail, we can pinpoint exactly the benefits. 

• Make customer experience memorable both inside and outside the store. 
• Reduce risks and financial loss.
• Provide customer assistance at all times with conversational chatbots.
• Keep track of inventory.
• Make informed decisions and strategic marketing moves.
• Target your audience based on their behavior.
• Facilitate price optimization.
• Make in-store displays more attractive and gain the attention of potential buyers.

And so much more. You can combine AI knowledge with Machine Learning, Computer Vision, Data Analysis, Deep Learning, Generative AI, and so much more to boost your sales and marketing departments. You just need the right strategy and understanding of how AI can work for you. 

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The Truth About AI in Retail

So, is AI worth exploring and implementing? Yes! At least exploring. At Digital Sense, we like building solutions, not burdens, so we want to make your and your customer's lives easier. Through our consultancy services, we can assess all types of companies and guide you through your way to AI. If you are in the retail industry, you can count on our experience, and trust us that we will be able to assess you. 

If this is the first time you implement AI in your solution, we recommend conducting a thorough discovery. The truth is that a lot can be done in a company with AI, but only a solid strategy with a clear path will help. At Digital Sense, we’ve been doing it for more than 10 years, so if you are thinking about it, don’t hesitate to ask and contact us!