How AI is Changing Retail

AI is changing retail

How AI is Transforming the Retail Landscape:

Inventory Management:

Description: AI assists in creating better demand forecasting.

By analyzing marketplace, consumer, and competitor data, AI tools can predict industry shifts and inform marketing, merchandising, and business strategies.

Impact: Enhanced supply chain planning, as well as improved pricing and promotional planning.

Adaptive Homepage:

Description: Digital platforms now recognize customers and customize the online retail experience based on their current context, previous purchases, and shopping behavior.

AI systems continuously evolve a user’s digital journey, creating hyper-relevant displays for every interaction.

Impact: Enhanced user experience and increased customer engagement.

Dynamic Outreach:

Description: Advanced CRM and marketing systems learn a consumer’s behaviors and preferences to develop a detailed shopper profile.

This information is then used to deliver proactive and personalized outbound marketing, such as tailored recommendations and content.

Impact: More effective marketing campaigns and increased customer loyalty.

Interactive Chat:

Description: Interactive chat programs, or chatbots, use AI and machine learning to converse with customers, answer questions, and guide them to solutions.

These bots also collect valuable customer data.

Impact: Improved customer service, increased engagement, and valuable data collection.

Visual Curation:

Description: AI engines translate real-world browsing behaviors into digital retail opportunities.

Customers can discover new or related products using image-based search and analysis.

Impact: Enhanced product discovery and increased sales.

Guided Discovery:

Description: Automated assistants help customers narrow down product selections based on their needs and preferences.

Impact: Improved shopping experience and increased sales.

Conversational Support:

Description: AI-supported conversational assistants use natural language processing to help shoppers navigate questions and issues, redirecting to human experts when necessary.

Impact: Enhanced customer support and increased satisfaction.

Personalization & Customer Insights:

Description: Intelligent retail spaces recognize shoppers and adapt in-store displays and pricing based on customer profiles, loyalty accounts, or rewards.

AI algorithms also analyze demographic data, social media behavior, and purchase patterns to improve the shopping experience.

Impact: Personalized shopping experiences and increased customer loyalty.

Emotional Response:

Description: AI interfaces can recognize and interpret facial, biometric, and audio cues to identify shoppers’ emotions and reactions, delivering appropriate products or support.

Impact: Enhanced customer engagement and improved shopping experience.

Customer Engagement:

Description: Using IoT-enabled technologies, retailers can interact with customers and gain insights into consumer behavior without direct interaction.

For instance, the Kodisoft interactive tablet in restaurants allows customers to browse menus, order, and play games, collecting valuable data in the process.

Impact: Increased customer engagement and valuable data collection.

Operational Optimization:

Description: AI-supported logistics management systems adjust inventory, staffing, distribution, and delivery schemes in real-time to create efficient supply and fulfillment chains.

Impact: Streamlined operations and improved customer satisfaction.

Responsive R&D:

Description: Deep learning algorithms collect and interpret customer feedback and sentiment to support next-generation product and service designs.

Impact: Innovative products and services that cater to customer preferences.

Demand Forecasting:

Description: AI tools forecast industry shifts by mining insights from marketplace, consumer, and competitor data.

Impact: Proactive changes to marketing, merchandising, and business strategies.

Customized Selections:

Description: Retailers use AI to provide unique, personalized experiences for customers, leading to increased revenue.

Impact: Enhanced customer loyalty and increased sales.


The integration of AI in retail is setting successful businesses apart from the rest.

AI provides business intelligence, speed, and the ability to captivate customers with immersive shopping experiences.

From inventory management to customer engagement, AI is reshaping the retail industry, offering countless benefits and opportunities for innovation.

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How Artificial Intelligence Will Change Retail:

Understanding Shopper Behavior:

Description: AI is being used to reshape retail in an intelligent manner.

AI programs are assisting in making people’s lives better by understanding their preferences and behaviors.

Impact: Brands like Levi Strauss & Co. and American Eagle are already leveraging AI for various purposes, such as inventory tracking and personalized customer styling.

Targeting Customers:

Description: Levi’s is planning to use AI to offer more diverse body types for its models.

The company aims to enhance the overall consumer experience by potentially creating supplemental images, which could lead to a more personal and engaging shopping experience.

Impact: By making customers feel more confident about their purchases, AI technology could significantly impact the bottom line.

It could also reduce online apparel returns, which often exceed 25% due to size and fit issues.

More Efficient Business Operations:

Description: Tropical Smoothie Cafe, with over 1,200 locations, envisions using AI software to collect broad data that could assist in day-to-day operations.

Impact: Insights such as predicting order traffic, staffing, accurate product ordering, and menu pricing suggestions could be realized when AI works with an in-store POS system.

AI could also impact direct customer communication, helping with customer retention and reputation management.

Optimized Pricing, Forecasting, and Marketing:

Description: Many retailers lack the ability to track items across their supply chain.

AI can help in dynamic pricing, changing prices whenever necessary, and ordering inventory based on demand forecasting.

Impact: Dynamic pricing can be enabled, and marketing can be transformed.

AI could help create email campaigns tailored to millions of customers based on their engagement, behavior, and purchases.

What Needs to Happen First:

Description: Companies are currently in a wait-and-see mode regarding AI. The technology can be expensive to implement, and its ROI is still unproven.

However, the potential of AI to transform retail is undeniable.

Impact: While AI might bring about significant changes in retail, the transformation might not happen immediately.

Infrastructure and the right tools are required to realize the full potential of AI in retail.

AI Working Group:

Description: NRF has started its AI Working Group to be ready for AI and develop best practices for managing it.

The group aims to discuss best practices with AI and advise legislators on policies.

Impact: The group’s goal is to ensure that AI is used appropriately in retail and to be a voice in the AI debate.


Artificial intelligence is set to bring about significant changes in the retail sector.

From understanding shopper behavior to optimizing business operations, AI offers a plethora of opportunities for retailers.

As the technology continues to evolve, retailers need to be prepared to harness its potential to stay ahead in the competitive landscape.

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