The Digital World today
Bricks & Mortar sales have eclipsed due to online retail. However, in 2018, online sales represented only 11.9% of the world-wide retail market. During 2022, online purchases will take up approximately 83% the market. E-commerce moguls like Amazon, Alibaba and Pepperfry have taken a step towards offline channels to complement their e-com presence. New in-store technology drives the future of offline retail. Thus, revolutionising the shopping experience – AI and Machine Learning.
What is AI by definition
AI at its simplest is a computer program that can mimic or emulate human behaviour. In a nutshell, machine learning fuelled by data and data patterns powers Emulation. Machine learning is responsible for face recognition on smart phones, self-driving cars, and even Netflix recommendations. Machine Learning carries the potential to transform customer experience by making it more personalised and engaging.
Take for instance product placements at a retail store. While it would seem random and inconsequential, strategically placed products can double the retail revenue of a store. When fed with the sales data of a particular store. Machine Learning can discover patterns and correlations between:
- The products bought
- Highlighting what products were bought together.
Based on this analysis, AI will guide you through your product placement, making suggestions on how to group your products in order to increase sales. On the basis of how often a product is bought and which is seasonal, similar data are used for for inventory management.
AI in real life
Another great example of a retail chain trailblazing in this area is Sephora. The cosmetic giant’s colour IQ technology recognises customer’s colour tones. They do so by scanning their face and providing recommendations for concealer and foundation shades. Hardware stores are also staying ahead of the curve by deploying machine learning technology to identify products needed to complete a particular job and where they can be located in the store.
AI and machine learning technology find immense possibilities in back-end operations as well. H&M has leveraged this technology for inventory management through receipts and returns.
AI & its numerous advantages
These examples are just the tip of the iceberg. The possibilities with AI and Machine Learning in retail are endless. For instance it can be used to improve:
- Inventory turnover
- Optimise your stock
- Predict future revenue
- and a lot more.
Not only does machine learning enhance the shopping experience for existing customers and help to attract new ones, it can also make businesses more efficient. By gathering information on sales and trends, machine learning can help business owners to make more informed decisions, allocate resources more strategically, and free up staff for more high value tasks like assisting customers and building relationships with them.
AI and Machine learning carry immense potential for retail businesses and top retailers globally are rapidly getting on board. According to IDC, global spending on AI and cognitive technologies will reach $97.9 billion in 2023. This value is the double of $37.5 billion that will be spent in 2019.
However, retailers wanting to realise their AI and machine learning ambitions need to become data-driven businesses. Overall, there is an essential link between machine learning and data. Therefore, before retailers embrace this new technology, it’s critical that they automate and streamline their data collection and management processes. Get in touch with an experienced team member at Tempo Process Automation to find out how.
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