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Reshaping Retail Operations: The Role of AI in 2020 and Beyond

Sree Singaraju
Publication Date
2 June 2020

Reshaping Retail Operations: The Role of AI in 2020 and Beyond

It’s no secret that the COVID-19 outbreak has changed how retailers are operating and interacting with customers. An earlier post explored three trends that the pandemic seems to be accelerating – including contactless transactions, personalization, and the importance of great loyalty and rewards programs. This time let’s take a closer look at what’s happening behind the curtain and the technology that’s poised to super-charge operational efficiency and worker productivity. 

That technology is artificial intelligence (AI), and a Forrester Research survey revealed that 59% of retail and wholesale purchase influencers plan to invest in it this year. Here are three ways retailers can put AI to work to support operations.

Retail Operations Trend #1: “Returning” Efficiency

Merchandise returns are a real drag on retailers. Industry experts estimate that customers return 5% to 10% of what they buy in store and 15% to 40% of what they purchase online. Those returns add up – with merchandise returns accounting for $309 billion in lost sales for U.S. retailers. What’s more, about 9% of returns are fraudulent, with an associated cost of an estimated $27 billion. Returns aren’t fun and games for customers, either. In fact, one industry survey found that nearly three-quarters of Americans view returns as their least favorite part of shopping online.

Add it up and retailers have numerous opportunities to put AI and machine learning (ML) to work. These technologies can help automate the returns process while identifying suspicious patterns – with a scan-and-go in-store kiosk that eliminates the need to stand in line for the customer service desk. Additionally, ID verification systems and video analytics machine learning algorithms can be added to minimize return fraud.

How are you tackling challenges related to merchandise returns? Have you considered how AI can help automate the process, reducing friction for customers and raising productivity for your workforce?

Retail Operations Trend #2: Deploying AI “associates”

AI conversational agents can become an innovative addition to a retailer’s in-store experience. AI can provide new, personalized ways to engage with customers – freeing associates to focus on those with more complex questions.

The cosmetics industry provides two intriguing examples of what’s possible. Olay has an AI-powered Skin Advisor feature, which analyzes skin based on an uploaded selfie and a customer’s self-reported skin care preferences. The AI determines the user’s “skin age” and then recommends products based on those results.

L’Occitane en Provence uses another form of AI – facial recognition software – to serve up relevant products as customers approach the store. After installing the solution, stores experienced a 36% bump in conversion, illustrating AI’s potential as a new member of a store “workforce.”

Even if you aren’t selling cosmetics, you can deploy AI as part of your team. How might these technologies serve as an extension of your sales team?

Retail Operations Trend #3: Lightening the load for human associates

AI and ML tools can help stores overhaul how they manage day-to-day operations, empowering associates to stay focused on customers, not manual tasks.

AI can be used to execute buy online/pick-up in store, saving customers effort and enabling associates to spend less time moving and tracking merchandise. For large chains, AI can help tailor product selection and services based on each store’s local people, places, and events that influence customer behavior and demand. And AI-enabled automation can help in monitoring and replenishing inventory. Computer vision can be used to notify store associates when certain shelves need to be restocked. Things that may have seemed like science fiction 5-10 years ago are now being deployed and piloted.

In what areas do human associates provide the greatest value to your customers? How can you offload manual, repetitive tasks to AI so they can focus on those areas?

These examples are only the beginning when it comes to how retailers can use artificial intelligence and machine learning to improve in-store operations and worker productivity. Ready to put AI to work for your business? Let’s talk.

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