If customers have a negative experience shopping with one retailer, they don’t have to go far to find another. The advent of online retail has put a staggering number of options within a few taps of the keyboard. A retailer that abruptly discontinues a beloved product will just as abruptly lose that product’s customers, while a retailer that sends its customers tailored offers stands to gain their loyalty.
For both online and brick-and-mortar shops, success hinges on understanding enough about their customers to create individualized experiences—a fact retailers are recognizing. The global retail analytics market is estimated to reach $10.4 billion by 2023 and, according to a JDA Software survey, 40 out of 100 merchandising professionals and category managers said big data and predictive analytics are their top investment priorities over the next 5 years.
A Changing Retail Landscape
Retailers who have embraced digital transformation successfully are gaining a significant competitive advantage in an atmosphere where customer experience rules. And while traditional retailers are adopting digital technologies such as Internet of Things (IoT), mobile, augmented reality (AR) and virtual reality (VR), artificial intelligence (AI) and machine learning (ML) to connect with customers, digital players have recognized the advantages of establishing brick-and-mortar locations to round out the experience they can offer their customers.
Here are a few of the most disruptive developments in retail today:
- VR and AR – Simulation technology allows customers to arrange furniture in a virtual rendition of their home, check the fit of clothes without trying anything on, and even test drive a car.
- Customer adoption of emerging platforms – Shoppers increasingly use technology to research products and services, making it essential for retailers to address customer concerns in real time.
- New classes of retailers – Retailers are inventing new business models such as brick-and-click that integrate online and offline sales portals.
- New metrics to measure success – Customer experience per square foot is supplanting sales per square foot as the primary measure of retail performance.
- Rising digital adoption – Retailers are engaging AI technology to supplement human customer support. Chat-based shopping and voice commerce increasingly deliver personalized, customized, and localized experiences to customers.
- Essential mobile devices – Proximity technologies such as Bluetooth Low Energy (BLE) beacons, near field communication (NFC) and quick response (QR) codes provide opportunities to retailers to engage with customers via their smartphones.
Our Solution
Companies have more data than ever. At the same time, retailers have less and less time to collect and process this data and to think about market changes. It is not surprising that artificial intelligence could be a promising solution to today’s retail challenges. Machine learning analyzes data to the next level. Using massive amounts of product and price data, sophisticated algorithms learn different pricing and sales patterns. Using an endless number of simulations, the algorithm identifies patterns that are beyond human reach. Machine learning algorithms have been proving to be effective over other methods for years now.
Our main value is to deliver valuable and cost-effective solutions to our clients. That’s why we developed an approach to R&D projects that allows us to see the progress at every stage and deliver solutions incrementally, allowing clients to decide if additional efforts are worth investment or a change of direction is required.
Our most popular use cases in retail industry are:
- Customer Analytics: Help algorithms to understand human speech and text to find the right information quickly, automate customer service, create chatbots for different departments, and easily find topics in text documents.
- Predictive Analytics: Understand your data from the past to predict the future for eCommerce warehousing or Supply Chain. Build forecasts to understand how your company can get more profits.
- Recommender Systems: Improve your conversion rate with more relevant recommendations. Create the most personalized experience for your customers.
- Patterns and Forecasting: Find patterns in your historical data and dig deeper to predict trends and seasonal changes. Forecast demand for your products. Create a pricing strategy to beat competitors
- NLP (Natural Language Processing): Analyze customers’ behavior and build segmentation models. Optimize targeting, personalization, and overall customer experience.
- Computer Vision: Recognize goods to control their availability for on-time stock replenishment. Use biometrics, AR, and face recognition for automating tasks and gathering more information.
Our advantage is that we offer a truly end-to-end solution with these use cases to solve the challenges of your business.
Conclusions
To achieve a successful digital transformation, retailers need to do more than simply acquire huge data sets. Artificial intelligence capabilities can equip retailers with the ability to ingest large volumes of data in various formats across locations, learn from patterns, and respond in real time.
In our experience with providing data analytics support, we saw that artificial intelligence (AI) and machine learning (ML) resulted in 4% increase in sales and 5% improvement in promotion effectiveness. Creating a 360˚ customer profile also helped generate relevant, personalized offers to customers.
In addition to helping retailers customize their offers, AI and ML enable predictive analytics, allowing retailers to project the details of a customer’s history into the future, and calculate outcomes for events such as product sales or store renovations. Understanding these outcomes vastly increases retailers’ ability to prepare for events and respond to customers proactively. Thus, AI and ML offer enormous potential for retailers to deliver compelling customer experience, drive cost efficiencies, and even improve employee motivation. Data analytics, AI and, ML have already begun to disrupt the way retailers do business. Retailers that successfully adopt digital technologies will reap competitive advantages.