# How AI Is Empowering Retail Stores | Capterra

> Technology can help get the most out of your retail store. Discover what artificial intelligence in retail can do.

Source: https://www.capterra.com/resources/empowering-retail-stores-with-artificial-intelligence

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# How AI Is Empowering Retail Stores

By Jake Rheude

Jake Rheude

Jake Rheude is the Vice President of Marketing for Red Stag Fulfillment, an eCommerce fulfillment warehouse born out of eCommerce. He has years of experience...

[See bio & all articles](https://www.capterra.com/resources/author/jrheude/)

  

Published November 7, 2022

8 min read

Table of Contents

-   [Barriers for traditional retail stores](#barriers-for-traditional-retail-stores)
-   [3 practical roles of AI in retail](#3-practical-roles-of-ai-in-retail)
-   [How AI can provide better human experiences](#how-ai-can-provide-better-human-experiences) 
-   [Improve your overall quality of business using AI](#improve-your-overall-quality-of-business-using-ai)
-   [Should I use AI in my retail store?](#should-i-use-ai-in-my-retail-store)

## Discover the hidden capabilities of AI for your retail store.

For years, the retail business has been undergoing change. AI in retail is expected to develop tremendously over the next few years, with the market reaching around $24 billion by 2028 [\[1\]](#sources).  

AI will play a significant role in driving the various aspects of the digital retail industry. It keeps improving efficiency, speed, and accuracy with advanced data and predictive analytics technologies to assist retail businesses in making data-driven decisions.    

With AI, retailers can gain a competitive advantage. Businesses with AI-powered solutions can gain more customers, centralize processes, and improve the personalized customer experience. Moreover, it helps to manage inventories and increase business efficiency.

Read on to find out how retailers can leverage AI to engage with their customers and optimize operations.

## Barriers for traditional retail stores

In total, the retail sector lost almost 800,000 jobs during 2020, compared with about 200,000 jobs from 2017 to 2019 [\[2\]](#sources). Alarmingly, that number doesn't account for retailers that permanently shuttered locations and were unable to hire back workers as in-person shopping began to resume.

Here are some of the biggest barriers that still exist today:

-   **Online purchases**: eCommerce is and will remain one of the biggest threats to traditional brick-and-mortar stores. With more options and flexibility for consumers to purchase goods and services digitally, retail stores need to compete with online stores for attention. 
    
-   **Potential for poor customer experiences**: When it comes to customer service, brick-and-mortar stores are only as good as their best employees. To maintain loyalty, customer experience is critical—87% of companies say they expect to compete on the basis of customer experience yet nearly six in 10 (57%) of customer-facing employees say they do not feel “set up to succeed” in their customer interactions [\[3\]](#sources). That’s troubling for customer retention.
    
-   **Finding and scheduling staff**: As we mentioned above, 800,000 jobs were lost in the retail sector during 2020. When consumers returned to storefronts, retailers scrambled to hire back quality store workers and have since found themselves up against a hot job market. 
    
-   **Maintaining brand loyalty and awareness**: It's well established that today's consumers are less loyal to brands than they used to be, making it much harder to get a foothold in the market. And even when you do, it’s just as easy to lose it. 
    

With all of those roadblocks standing in the way of retail, it doesn’t mean that retailers should immediately pivot to selling entirely online, but instead should look to get ahead with some assistance through AI. 

## How AI tools can help

AI can readily handle and assess unstructured data. This is the information that does not fit into structured columns and rows. Cognitive AI technologies, like RPA (robotic process automation) or NLP (natural language processing) tools, collect and analyze unstructured data to generate insights.

Artificial intelligence marketing is often divided into two distinct categories: task automation and intelligent/machine learning. But these two user groups can function as separate or combined programs. Standalone programs are AI tools not linked to a company's primary product information channels. Integrated AI programs, on the other hand, are integrated into your existing framework. 

Consider what happens when you peek at an item on eBay. The website uses integrated artificial intelligence to make additional product suggestions. It does so based on browsing behavior. 

Retail can utilize various artificial intelligence use cases, regardless of intelligent integrated tools or simple standalone programs. Recognizing where each performs best is the key to getting effective results.

## 3 practical roles of AI in retail

To grow and maintain a retail business in today’s economy, businesses must look to new innovations to keep pace. AI software offers a variety of ways to effectively improve retail operations with [practical applications](https://www.capterra.com/resources/applications-of-artificial-intelligence/) that can save time and money.   

### 1\. Automated operations

Artificial intelligence has the potential to automate store processes, resulting in lower retail store operating expenses. Furthermore, AI in retail can make the job of the shop manager easier by automating back-office activities and enhancing quality assurance using robotics. Retail intelligence is aided by automation, which frees up staff to accomplish more work. 

For example, Amazon Go employs no-checkout technology. Customers sign up via the Amazon Go app, but the entire purchase process is automated. Artificial intelligence can manage all aspects of the retail supply chain in real time, including inventory, distribution, personnel, and delivery. 

### 2\. Reduced energy consumption

AI can help businesses achieve their sustainability goals and reduce their energy usage. For example, AI helps forecast sales more accurately which informs the number of items to be ordered, especially for perishable foods and other short-life products. In the end, more accurate inventories leads to less products wasted. 

With the help of AI applications, you can even take the guesswork out of optimizing your energy use and storage space. Additionally, AI helps keep track of energy consumption for lighting, ventilation, and any other specific needs for your operation. 

### 3\. Inventory tracking

“Out of stock” is a phrase that almost every shopper hates to hear. When stores integrate artificial intelligence into their [inventory management](https://www.capterra.com/inventory-management-software/), they will be able to tell when a product is running out of stock and restock quickly. 

Some large stores even use robots to restock their shelves after customers pick up a product.

## How AI can provide better human experiences 

On the back end, AI is helpful for streamlining your retail’s operations. AI can also help retailers receive better insights to improve customer experiences, so let’s discuss some of those benefits that customers and employees can directly see. 

### 1\. Personalization made easier

In businesses, customers are the center of attention. All the effort of businesses is to make sure that the customers are happy throughout their customer experience journey. The best way to impress customers is to personalize their experience. With AI, this could be anything from using voice-activated navigation systems to welcoming and directing customers when they come into a store. Another option is to create virtual rooms to let people try out products. 

### 2\. Elevate your staff’s performance 

There is a general belief that AI solutions threaten human jobs—that’s not entirely true. Employees in retail stores can work with AI to elevate their own job performance. With AI solutions, workers no longer need to memorize tedious details about every product in the store, and can help analyze customers’ data and spot potential problems. That allows businesses to spend more time focusing on how to resolve these problems. 

### 3\. Improved customer experience

AI has been integrated into the most recent generations of [CRM](https://www.capterra.com/customer-relationship-management-software/) and [CDP](https://www.capterra.com/customer-data-platform-software/) platforms, resulting in a superior customer experience. [Conversational AI-powered bots](https://www.capterra.com/live-chat-software/) are also supporting service agents in optimizing the client experience. Meanwhile, sentiment analysis and predictive analytics allow retail brands to gain actionable insights. These help direct subsequent encounters between a brand and a customer.

In addition to being invaluable for top-quality business analytics, AI enhances the consumer service journey in a myriad of ways. This includes real-time conversation tracking, feedback to care workers, and intelligence to track language, voice patterns, and psychographic profiles to accurately predict consumer demands.   

Some CRM platforms have incorporated AI into the software to give real-time decisions, predictive analysis, and conversational assistants. These features assist brands in completely understanding and engaging their consumers. 

## Improve your overall quality of business using AI

We've looked at how AI can help streamline operations and improve the customer experience. Now we will take a look at how it can help to drive your bottom line through improved sales and marketing tactics [\[4\]](#sources).  

### 1\. Upsell and cross-sell smarter

Think of Amazon or any other eCommerce store—how do these stores know how to give their customers the best offers? It all starts from the first use of the store. After registering an account with them, they begin to track activities to give the best offer—ensuring premium personalized services.

Using AI, retail stores can allow users to open an account to track their shopping activities. From their activities, the store’s AI can create special offers, package deals, and other discounts that will convert them into a loyal customer. The AI can also help learn what customers will need on their next visit and alert the business owner to stock the store ahead.

### 2\. Target relevant customers

In retail, AI can be an excellent tool for identifying and targeting relevant customers. When profiling buyers and their buying patterns, a large amount of data must be comprehended to profile a suitable customer. Because of the sheer number of variables to address, processing the data might be a massive undertaking for a single person, or even for a group of individuals.

Once taught, AI in retail may reliably identify customers with comparable demographic characteristics to previously identified relevant customers. With this automated identification process, the store employee merely needs to discover a way to engage and persuade these customers.

### 3\. Measure results with split testing

Split testing is one way businesses use AI to understand their customers and find ways to provide better services. A business owner tries two options in split testing to see which one gives a better result. 

It is used mainly for websites, but retail stores can also put it into practice. Store managers can periodically change the store’s layout to find which best improves critical metrics sales. AI helps track which layout performed best. Split testing services can collect insights and data to aid in the tracking and improvement of performance measures. The AI technology helps follow consumers' journeys around the business. It can also discover the most popular product categories, or locations requiring greater attention. With such information, businesses can improve store layouts and product placements to increase sales.

[Google Optimize](https://www.capterra.com/p/246659/Google-Optimize/) uses AI to help businesses improve website layouts

## Should I use AI in my retail store?

Retail businesses should feel encouraged to begin experimenting with AI in their stores to attract more customers, increase brand loyalty, and scale revenue. 

However, the cost of implementing AI technologies and the hurdle of finding AI-experienced workers can make people lose interest, especially small-business owners. The fear of a data breach and ethical concerns are also reasons why executives may struggle with adopting and implementing AI. 

The way to approach such problems is to start small. Map out your business needs, select a priority, and experiment with AI solutions in tackling the challenge. Outsourcing AI services to strong and reputable companies is another avenue that can help reduce the costs and time associated with implementing an AI solution.

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_Note: The applications selected in this article are examples to show a feature in context and are not intended as endorsements or recommendations. They have been obtained from sources believed to be reliable at the time of publication._

Sources

1.  [Global AI In Retail Market Size, Share & Industry Trends Analysis Report](https://www.reportlinker.com/p06352693/Global-AI-In-Retail-Market-Size-Share-Industry-Trends-Analysis-Report-By-Technology-By-Sales-Channel-By-Component-By-Application-By-Regional-Outlook-and-Forecast-.html?utm_source=GNW), ReportLinker
    
2.  [Retail trade employment: before, during, and after the pandemic](https://www.bls.gov/opub/btn/volume-11/retail-trade-employment-before-during-and-after-the-pandemic.htm), U.S. Bureau of Labor Statistics
    
3.  [To improve customer experience, improve the customer-facing employee experience](https://www.gartner.com/document/3996862?ref=TypeAheadSearch), Gartner
    
4.  [5 Ways to boost eCommerce sales by working with your 3PL](https://redstagfulfillment.com/boost-ecommerce-sales/), Red Stag Fulfillment
    

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Looking for Retail Management Systems software?Check out Capterra's list of the [best Retail Management Systems software](https://www.capterra.com/retail-management-systems-software/) solutions.

### Was this article helpful?

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## About the Author

[### Jake Rheude](https://www.capterra.com/resources/author/jrheude/)

Jake Rheude is the Vice President of Marketing for Red Stag Fulfillment, an eCommerce fulfillment warehouse born out of eCommerce. He has years of experience in eCommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.

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