How retailers are embracing AI

In terms of retail, artificial intelligence involves the use of automation, data, and technologies such as machine learning algorithms to elevate the customer experience, optimize business performance and increase profits. Many leading retailers have already adopted this cutting-edge technology to stay ahead of the competition and it's been predicted AI services in retail will increase from $5 billion to above $31 billion by 2028.

Let's see how AI benefits brands and consumers, as we look at successful applications of this technology in retail.

AI helps to enhance customer experience

Thanks to AI, retailers can make customer journeys much more convenient and engaging. A great example of elevating in-store shopping experience with AI is Zara's AI robots. The retailer needed to find a way to avoid long lines and reduce the waiting times of customers after adopting the Buy Online, Pick-Up in Store concept. For this purpose, Zara introduced AI robots, which fetch the products from the back of the automated retail stores and fasten the in-store collecting process.

Amazon has also implemented AI in order to minimize friction at checkout. The retailer used the technology in Amazon Go, the cashier-less store which shoppers can enter, pick up the stuff and accept the automatic charging of their bank cards for the purchase when they exit the store. On top of that, struggling to elevate customer experience, retailers use AI to ensure on-shelf availability, send product recommendations to customers, deliver proactive support, and more.

AI is driving sustainability in retail

According to the survey by IBM Institute for Business Value, 84% of consumers say sustainability is very or extremely important to them when choosing a brand. Over the past couple of years, AI has become a crucial element in achieving zero-waste initiatives.

H&M Group is one of the retailers that leverage AI in order to make fast fashion sustainable. In 2021, one of the H&M Group brands and external partners launched a Body Scan Jeans pilot project. Customers could have their body 3D scanned in-store. A digital avatar would then be generated, enabling the customers to try different denim colors and styles virtually. Machine learning converted the body scan into a paper pattern and measurement list. Then the customer could pick up the personalized item in-store. According to Linda Leopold, head of AI at H&M, this is an example of on-demand manufacturing, which "not only solves the problem of size and fit for the customer but also leads to fewer returns and decreased CO₂ emissions."

AI allows brands to track and analyze customer behavior

There are AI-based solutions on the market allowing retailers to study and analyze consumer behavior on a website or a mobile app. A customer behavior analysis helps brands understand what influences consumers' buying decisions for the delivery of a more personalized online shopping experience, which has a great impact on conversion rates.

For example, Argentine fashion brand Jazmin Chebar uses Cappasity to deliver an immersive shopping experience to consumers. Besides tools for 3D content production and integration, Cappasity provides an AI-based analytics system and allows the brand to see how their customers interact with 3D content and what they like and dislike about a product.

Thanks to AI-based analytics, the brand tracks all consumers' interactions with 3D product images and estimates customers' engagement in immersive content. According to Julieta Maidana, e-commerce manager at Jazmin Chebar, the solution moved the brand to a new stage of product representation with high-quality 3D images. The brand noticed improvements in conversion rates and time spent on the product page, managing to achieve impressive results across all departments with the 3D technology.

On top of that, AI-based analytics can be used to create a sustainable A/B testing of product packaging. For instance, the solution provides a heatmap for every product, which illustrates each customer's interactions with 3D images, like rotating them, zooming in, etc. Retailers can use these heatmaps for comparison and analysis of focus group reactions to product packaging or to see how a consumer reacts to different product packages.

To sum up, brands that leverage AI can bring in-store customer experience to the next level, make their business more sustainable, and get useful insights about customer behavior during online shopping. Investment in AI technology will give retailers a competitive advantage in the future.