The Future of Retail (Part 1): Personalize with AI, Win the Customer
The retail industry has been evolving at light-speed, rapidly transitioning from family merchants who personally knew their customers and their purchasing habits, to the online digital era where customers are empowered with seemingly limitless information.
Despite this monumental shift to digital, physical stores are still alive and well. One telltale sign that brick-and-mortar remains the ultimate battleground for customer loyalty is how pure online players, such as Amazon and Alibaba, recently expanded into physical presences. To truly connect with their digitally savvy customers, retailers must leverage big data and artificial intelligence (AI) to develop deeper business and customer insights, and offer innovative and nonintrusive products, services and experiences in the following areas:
Personalized Product Offerings
Our experiences have shown that personalized product offerings can almost double conversion rates by using AI platforms to process customer data gathered from multiple touchpoints, such as point-of-sales and supply chain systems, connected devices, mobile apps, and in-store sensors and cameras. Combined with purchasing and browsing history, retailers use these insights to identify shopping behaviors, tastes and preferences, as well as other demographic and segmentation information to determine current needs and interests and offer personalized products. AI tools incorporate data in real-time and apply collaborative filtering, feature-based algorithms and contextual learning to make predictions and recommendations around customer behaviors to help consumers throughout their buying journeys.
Compelling personalized promotions require predictive analytics, as well as a complete 360-degree view of customers and prospects. To make promos highly personalized, an AI system can test and quantify the impact of past promotional tactics and recommend the most effective promotions based on a customer profile, store location, customer segments and item features, for example. AI systems could also fine-tune and improve promotion effectiveness by monitoring recent customer purchases and social media activity.
Personalized Location-Based Services
Additionally by leveraging AI, retailers can offer personalized location-based services through programmatic and location-based marketing, such as instant location- and occasion-based promotions, which are dynamic and occur in real-time to address customer needs. AI and big data help retailers understand their customer’s location-based interactions, both online and offline, and predict customer shopping preferences to further enhance the entire customer experience. All details of the shopping process are analyzed, including shopping duration, in-store time, shopping behavior (leisure, social, last-minute, new experience, deal-seeker), as well as what shelf, model or brand received more customer attention. Customers can be micro-segmented by linking data insights to a CRM platform.
Intelligent and Immersive In-store Experiences
The customer journey is not complete without an immersive in-store experience, which can be a powerful competitive differentiator. AI capabilities deliver insights for potential offline space design and layout for optimal customer experience and community convenience. Additionally, AI and advanced analytics can be used to determine the optimal category, brand and product location for a more cohesive in-store journey. With a the right blend of digital, AI, AR and VR solutions for in-store design and space planning, retailers can also create an “endless aisle” or a “digital wall” to provide an immersive, engaging experience for their customers to improve sales.
Additionally, AI-based in-store shopping services provide an effortless customer experience and motivate consumers to carry out planned or ad-hoc purchases. Combined with digital front-end tools, AI adds value to the in-store experience. Here are some examples:
- A mobile and AI-enabled smart item finder with integrated visual and text search can identify relevant products. If a customer usually buys organic food, they can use a mobile finder application to their find favorite organic brand or product with personalized promotions, for example.
- An AI-based, voice-enabled, personalized in-store navigator can help consumers plan the fastest or the most optimal route to manage their shopping list. This solution can also prompt relevant promotions or complimentary product recommendation based on a shopping list.
- Product visualization allows customers to envision products before purchasing. For example, if a customer wants to buy a new microwave and is tight on counter space, a AR/VR-enabled app could capture the image of the product with the dimensions and overlay that image on top of an image of the counter to determine whether the microwave will fit and how it will look like there.
Connecting with customers and earning their trust is critical in a highly customer-centric market. AI and big data are powerful tools for retailers to identify and respond to changes in consumer behaviors and market trends. By leveraging collected customer data, retailers can withstand the test of time and disruption by offering more personalized products, services and experiences to meet customer’s needs and improve loyalty.